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Citi Group: Presented by

Citi Group is one of the largest financial institutions in the world, formed through major mergers including Citicorp and Travelers Group in 1998. It operates through divisions like Consumer Banking, Global Wealth Management, Global Cards, and Institutional Clients Group. However, Citi Group also faces challenges like criticism over scandals, rising unemployment, and heavy debt loads.

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Bulbul Sharma
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161 views19 pages

Citi Group: Presented by

Citi Group is one of the largest financial institutions in the world, formed through major mergers including Citicorp and Travelers Group in 1998. It operates through divisions like Consumer Banking, Global Wealth Management, Global Cards, and Institutional Clients Group. However, Citi Group also faces challenges like criticism over scandals, rising unemployment, and heavy debt loads.

Uploaded by

Bulbul Sharma
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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CITI GROUP

Presented By
Bulbul Sharma
Presentation Scheme
 Introduction
 Travelers Group
 Citicorp and Travelers Merger
 Divisions
 Competitors
 Criticism
 Reasons for Success
 Challenges
 Recommendation
Introduction
 City Bank of New York, which was chartered by New York State
on June 16, 1812, with $2 million of capital.

 The bank opened for business on September 14 of that year, and


Samuel Osgood was elected as the first President of the company.

 The company's name was changed to The National City Bank of


New York in 1865 after it joined the new U.S. national banking
system, and it became the largest American bank by 1895.

 It became the first contributor to the Federal Reserve Bank of


New York in 1913, and the following year it inaugurated the first
overseas branch of a U.S. bank in Buenos Aires.
Contd…..
 In 1918, it purchased U.S. overseas bank International
Banking Corporation which helped it become the first
American bank to surpass $1 billion in assets.

 It became the largest commercial bank in the world in


1929.

 It was the first major U.S. bank to offer compound


interest on savings (1921); unsecured personal loans
(1928); customer checking accounts (1936) and the
negotiable certificate of deposit.
Contd…..
 Later to become MasterCard, the bank introduced its
First National City Charge Service credit card - popularly
known as the "Everything card" - in 1967.

 John S. Reed was elected CEO in 1984, and Citi became a


founding member of the CHAPS clearing house in
London.

 Under his leadership, the next 14 years would see Citibank


become the largest bank in the United States, the largest
issuer of credit cards and charge cards in the world, and
expand its global reach to over 90 countries
Travelers Group
 Travelers Group, at the time of merger, was a diverse group of
financial concerns that had been brought together under CEO Sandy
Weill.

 Weill mastered the buyout of Primerica - a conglomerate that had


already bought life insurer A L Williams as well as stock broker
Smith Barney.

 Travelers acquired Shearson Lehman - a retail brokerage and asset


management firm

 Finally, in November 1997, Travelers Group made the $9 billion deal


to purchase Salomon Brothers, a major bond dealer and investment
bank.
Citicorp and Travelers merger
 On April 6, 1998, the merger between Citicorp and
Travelers Group was announced to the world, creating a
$140 billion firm with assets of almost $700 billion.

 The new company maintained Citicorp's "Citi" brand in its


name, it adopted Travelers' distinctive "red umbrella" as
the new corporate logo, which was used until 2007.

 The chairmen of both parent companies, John Reed and


Sandy Weill respectively, were announced as co-chairmen
and co-CEOs of the new company
Contd…..

 The Travelers Property Casualty Corporation merged with


The St. Paul Companies Inc. in 2004 forming The St. Paul
Travelers Companies

 Citigroup agreed to sell the logo back to St. Paul Travelers,


which renamed itself Travelers Companies. Citigroup also
decided to adopt the corporate brand "Citi" for itself and
virtually all its subsidiaries, except Primerica and Banamex.
Divisions
 Citigroup is divided into four major business
groups:


Consumer Banking
 Global Wealth Management
 Global Cards
 Institutional Clients Group
Contd…
 Global Consumer Group comprises four sub-divisions: Cards
(credit cards), Consumer Lending Group (Real-Estate Lending,
Auto Loans, Student Loans), Consumer Finance, and Retail
Banking.

 Citi Cards is responsible for around 40% of the profits with GCG, and
represents the largest issuer of credit cards across the world as well as a
3,800-point ATM network across 45 countries.

 Consumer Finance division (branded as "CitiFinancial") accounts for


about 20% of GCG's profits, and offers personal loans and homeowner
loans to consumers in 20 countries worldwide.

 Citibank is the third largest retail bank in the United States based on
deposits. In Mexico Citigroup's bank operations are branded as Banamex.
Contd…
 Global Wealth Management divides itself into Citi Private
Bank, Citi Smith Barney and Citi Investment Research, and
generated 7% of Citigroup's total revenue in 2006.

 Citi Private Bank provides banking and investment services to high


net worth individuals, private institutions, and law firms.

 Citi Smith Barney is Citi's global private wealth management unit,


providing brokerage, investment banking and asset management
services to corporations, governments and individuals around the
world.

 Citi Investment Research is Citi's equities research unit comprised


of 390 research analysts across 22 countries.
Contd…
 Citi Institutional Clients Group Citi announced on October 11,
2007 the formation of the new Institutional Clients Group
comprising Citi Markets & Banking (CMB) and Citi Alternative
Investments (CAI).
 Citi Markets and Banking Containing Citi's most market-sensitive
divisions, "CMB" is divided into two primary businesses: "Global Capital
Markets and Banking" and "Global Transaction Services" (GTS).
 Global Capital Markets and Banking provides investment- and commercial-
banking services covering institutional brokerage, advisory services, foreign
exchange, structured products, derivatives, loans, leasing, and equipment finance.

 GTS offers cash-management, trade finance and securities services to


corporations and financial institutions worldwide. CMB is responsible for around
32% of Citigroup's annual revenues, generating just under US $30 billion in 2006
financial year.

 Citi Alternative Investments is an alternative investment platform that


manages assets across five classes - private equity, hedge funds, structured
products, managed futures, and real estate.
Competitors
 Tier 1 Competitors:
 JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo
(WFC), US Bancorp (USB)

 Tier 2 Competitors:
 Goldman Sachs (GS), Morgan Stanley (MS), PNC Financial
Services (PNC), BB&T Corp (BBT), State Street (STT) Ambac
(ABK), MBIA (MBI)
Criticism
 Citigroup proprietary government bond trading scandal
Citigroup was criticized for disrupting the European bond
market by rapidly selling €11 billion worth of bonds on August
2, 2004 on the MTS Group trading platform, driving down the
price, and then buying it back at cheaper prices.

 Regulatory action On March 23, 2005, the NASD


announced total fines of $21.25 million against Citigroup
Global Markets, Inc., American Express Financial Advisors
and Chase Investment Services regarding suitability and
supervisory violations relating to mutual fund sales practices
between January 2002 and July 2003. The case against
Citigroup involved recommendations and sales of Class B and
Class C shares of mutual funds.
Contd…
 Terra Securities scandal In November 2007 it became
public that the Citigroup is heavily involved in the Terra
Securities scandal, which involved investments by eight
municipalities of Norway in various hedge funds in the
United States bond market.The funds were sold by Terra
Securities ASA to the municipalities, while the products
were delivered by Citigroup.

 Theft from customer accounts A three-year


investigation found that Citigroup from 1992 to 2003 used
an improper computerized "sweep" feature to move
positive balances from card accounts into the bank's
general fund, without telling cardholders.
Reasons for Success
 Merger and Acquisition:
 Citicorp and financial conglomerate Travelers Group on April

7, 1998
 The Travelers Property Casualty Corporation merged with

The St. Paul Companies Inc. in 2004

 Various services:
 The first major U.S. bank to offer compound interest on

savings (1921); unsecured personal loans (1928); customer


checking accounts (1936) and the negotiable certificate of
deposit.
Challenges
 Rising Unemployment

 Eliminating workforce

 Heavy bed debts


Recommendations
 Improve and enhanced schemes

 Focus on the bed debts recovery

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