Citi: Global Investment Bank and Financial Services

Citigroup Inc., or Citi (stylized as citi), is a New York-based American global investment bank and financial services firm. InCiticorp and Travelers Group, a financial behemoth, merged in 1998 to form the company; Travelers was eventually spun out in 2002. Citigroup owns Citicorp, Citibank’s holding company, and numerous global subsidiaries.

Citigroup is a Delaware corporation.Citigroup is the third-largest bank in the United States, and it is one of the Big Four financial organisations in the country, with JPMorgan Chase, Bank of America, and Wells Fargo. The Financial Stability Board considers it a systemically important bank, and it is frequently referred to as “too large to fail.” It is one of the Bulge Bracket’s nine global investment banks.As of 2021, Citigroup is placed 33rd on the Fortune 500.Citigroup has about 200 million customer accounts and operates in more than 160 countries. It employs 204,000 people, down from 357,000 before the financial crisis of 2007–2008, when it was bailed out by the US government with a huge stimulus package.

Citigroup Inc

Citigroup was founded on October 8, 1998, when Citicorp and Travelers Group merged for $140 billion to form the world’s largest financial services company. The company’s history is divided among many firms that eventually merged into Citicorp, an international banking organisation with operations in over 100 countries; or Travelers Group, a credit services, consumer finance, brokerage, and insurance company. The City Bank of New York (later Citibank) was founded in 1812, followed by Bank Handlowy in 1870, Smith Barney in 1873, Banamex in 1884, and Salomon Brothers in 1910.

Under the leadership of CEO Walter B. Wriston First National City Corporation was renamed “Citicorp” in 1974, and First National City Bank was formally renamed Citibank in 1976. [61] Shortly after, the bank introduced the Citi Card,  which was the first to use 24-hour ATMs. In 1984, Citi became a founding member of the CHAPS clearing house in London, and John S. Reed was elected CEO. Citibank would become the largest bank in the United States and the world’s largest issuer of credit and charge cards during the next 14 years under his guidance, expanding its global presence to over 90 countries.In 1987, the business invested $50 million in the formation of Avenue Pictures and $25 million in home video distributor International Video Entertainment for domestic distribution rights and a global distribution arrangement with Virgin Vision.

Sale of Smith Barney 

Citi’s global private wealth management branch, Smith Barney, offers brokerage, investment banking, and asset management services to businesses, governments, and people all around the world. Smith Barney has over 800 offices across the world and 9.6 million domestic client accounts, totaling $1.562 trillion in client assets.

Citi announced the combination of Smith Barney and Morgan Stanley Wealth Management on January 13, 2009. Citi received $2.7 billion in the joint venture and a 49 percent stake.

Following an appraisal by Perella Weinberg, Citi sold its remaining 49 percent ownership in Smith Barney to Morgan Stanley Wealth Management for $13.5 billion in June 2013.

Return to profitability, denationalisation

Citigroup turned a profit for the first time since 2007. It made a $10.6 billion profit in 2010, compared to a $1.6 billion deficit the previous year. Late in 2010, the government sold its remaining stake in the corporation, resulting in a $12 billion net profit for taxpayers. Because of a specific IRS tax exemption granted to Citi, the US Treasury was able to sell its shares at a profit while still owning Citigroup shares, netting $12 billion. “This (IRS tax) rule was never intended to cope with the exceptional situation of the government owning bank shares,” said Treasury spokesperson Nayyera Haq. “It was also not intended to restrict the government from benefitting from stock sales.”

Stress tests conducted by the Federal Reserve 

Citigroup was one of four financial institutions out of 19 large banks to fail the Federal Reserve’s stress tests, which are designed to gauge bank capital during a financial crisis. The 2012 stress tests looked at whether banks could endure a financial crisis in which unemployment is at 13%, stock values are halved, and housing prices are down 21%. Citi failed the Fed stress tests due to its aggressive capital return strategy and international loans, which the Fed deemed to be more risky than Citi’s domestic American loans. Citi’s international divisions accounted for half of the company’s revenue.Bank of America, on the other hand, collected 78 percent of its revenue in the United States after passing the stress test and declining to ask for a capital return from investors.

Citigroup has amassed $420 billion in surplus cash reserves and government securities by June 2012, the company’s 200th anniversary year.Citi had a Tier 1 capital ratio of 12.4% as of March 31, 2012.This was due to the sale of more than $500 billion in special assets held by Citi Holdings, which were guaranteed against losses by the US Treasury when the company was majority owned by the federal government.

Conclusion

Citi said in April 2021 that it would stop providing consumer banking services in 13 countries: Australia, Bahrain, China, India, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam. Citi will operate its consumer banking operations across the whole APAC and EMEA regions in only four markets: Hong Kong, Singapore, London, and the United Arab Emirates.

Citi also announced plans to withdraw consumer banking, as well as small-business and middle-market banking, in Mexico in January 2022.

Citi declared a $10 billion exposure to Russian assets on March 1, 2022, which might be severely impacted by Russia’s exclusion from the SWIFT banking system.