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Citigroup

Citigroup

Tagline

Live Richly.

Net Worth

$275,300,000,000

Started in (City)

New York

Started in (Country)

USA

Incorporation Date

08th December, 1998

Bankruptcy Date

-

Founders

  • Samuel Osgood

About

Citigroup Inc. is an American multinational investment bank and financial services headquartered in New York City. The Company was formed by the Citicorp and Travelers group for the purpose of creating world's largest financial organization. As of now Citigroup is the third largest banking institution in USA. Citigroup ranked 30th on the Fortune 500 as of 2019 with over 200 million customer accounts and doing business in more than 160 countries. As it grew, its bank sector became a leading innovator in financial services, becoming 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 (1961). The bank changed its name to The First National City Bank of New York in 1955, which was shortened in 1962 to First National City Bank on the 150th anniversary of the company’s foundation.

Beginning

Since its foundation on October 8, 1998. The history of the Citigroup is divided into several firms which are in the long run are incorporated into Citigroup, which later covered credit services, consumer finance, brokerage, and insurance. The company history dates back to the founding of the City Bank of New York (later Citibank) in 1812, Bank Handlowy in 1870, Smith Barney in 1873, Banamex in 1884, Salomon Brothers in 1910. Citicorp (1812–1985) City Bank of New York was chartered by New York State on June 16, 1812, with $2 million of capital. Serving most of the group of New York merchants, 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, although the bank had been active in plantation economies, such as the Cuban sugar industry, since the mid-19th century. The company organically entered the leasing and credit card sectors, and its introduction of U.S. dollar-denominated certificates of deposit in London marked the first new negotiable instrument in the market since 1888. The bank introduced its First National City Charge Service credit card—popularly known as the "Everything card" and later to become MasterCard—in 1967. Also in 1967, First National City Bank reorganized as a one-bank holding company, First National City Corporation, or "Citicorp" for short. The bank had been nicknamed "Citibank" since the 1860s when it began using this as an eight-letter wire code address.

Road to Success

In 1974, under the leadership of CEO Walter B. Wriston, First National City Corporation changed its formal name to "Citicorp," with First National City Bank being formally renamed Citibank in 1976. Shortly afterwards, the bank launched the Citicard, which pioneered the use of 24-hour ATMs. 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 becomes the largest bank in the United States and the largest issuer of credit cards and charge cards in the world and expands its global reach to over 90 countries. Creation of Citi Holdings (2009) In the Year 2009, the Citigroup announced its intention to reorganize itself into two operating units: Citicorp for its retail and institutional client business, and Citi Holdings for its brokerage and asset management. Citigroup will continue to operate as a single company for the time being, but Citi Holdings managers will be tasked to "take advantage of value-enhancing disposition and combination opportunities as they emerge", and eventual spin-offs or mergers involving either operating unit were not ruled out. Citi Holdings consists of Citi businesses that Citi wants to sell and are not considered part of Citi\’s core businesses. The majority of its assets are U.S. mortgages. It was created in the wake of the financial crisis as part of Citi\’s restructuring plan. It consists of several business entities including remaining interests in local consumer lending such as OneMain Financial, divestitures such as Smith Barney, and a special asset pool. Citi Holdings represents $156 billion of GAAP assets or ~8% of Citigroup; 59% represents North American mortgages, 18% operating businesses, 13% special asset pool, and 10% categorized as other. Operating businesses include OneMain Financial ($10B), PrimeRe ($7B), MSSB JV ($8B) and Spain / Greece retail ($4B), less associated loan loss reserves. While Citi Holdings is a mixed bag, its primary objective is to wind down some non-core businesses and reduce assets and strategically "breaking even" in 2015.

Challenges

On February 27, 2009, Citigroup announced that the U.S. government would take a 36% equity stake in the company by converting US$25 billion in emergency aid into common stock with a United States Treasury credit line of $45 billion to prevent the bankruptcy of the company. The government-guaranteed losses on more than $300 billion of troubled assets and injected $20 billion immediately into the company. The salary of the CEO was set at $1 per year and the highest salary of employees was restricted to $500,000. Any compensation amount above $500,000 had to be paid with restricted stock that could not be sold by the employee until the emergency government aid was repaid in full. The U.S. government also gained control of half the seats in the Board of Directors, and the senior management was subjected to removal by the US government if there were poor performance. By December 2009, the U.S. government stake was reduced from a 36% stake to a 27% stake, after Citigroup sold $21 billion of common shares and equity in the largest single share sale in U.S. history, surpassing Bank of America’s $19 billion share sale 1 month prior. By December 2010, Citigroup repaid the emergency aid in full and the U.S. government had made a $12 billion profit on its investment in the company. Government restrictions on pay and oversight of the senior management were removed after the U.S. government sold its remaining 27% stake in December 2010.

Failures

On June 1, 2009, it was announced that Citigroup would be removed from the Dow Jones Industrial Average effective June 8, 2009, due to significant government ownership. In June 2013, Citi sold its remaining 49% stake in Smith Barney to Morgan Stanley Wealth Management for $13.5 billion following an appraisal by Perella Weinberg. On January 13, 2009, Citi announced the merger of Smith Barney with Morgan Stanley Wealth Management. Citi received $2.7 billion and a 49% interest in the joint venture. In December 2002, Citigroup paid fines totaling $400 million, to states and the federal government as part of a settlement involving charges that ten banks, including Citigroup, deceived investors with biased research.

Achievements

  • In 2017, ranked in Top 100 in Global Diversity and Inclusion Index by Thomsom Reuters
  • In 2018, ranked Top 30 Employer for Working Families (Citi UK)
  • In 2015, ranked Top 50 in Employees for Women by Times
  • In 2014, ranked Top 100 in UK Firms For Diversity by Stonewall Equality Index
  • In 2020, Bloomberg awarded Financial Services Gender-Equality Index

Subsidies

  • Banamex
  • Citibank
  • Aeroméxico
  • SALOMON BROTHERS INTERNATIONAL LTD
  • Metalmark Capital

CEOs

  • Sandy Weill (1998–2003)
  • Charles Prince (2003–2007)
  • Vikram Pandit (2007–2012)
  • Michael Corbat (2012–2021)