Citigroup
Type: Public (NYSE: C)Founded: New York City, USA (1812)
Headquarters: New York City, USA
Key people: Charles Prince, Chairman & CEO, Robert Rubin, Director and Chairman of Executive Committee
Industry: Financial services
Products: Consumer Banking, Corporate Banking, Stockbroking, Investment Banking, Global Wealth Management, Investment Research, Private Equity, Structured Products
Website: www.citigroup.com
General Information
Citigroup Inc. (NYSE: C) is a major American financial services company based in New York City, formed from the merger of Citicorp and Travelers Group on April 7, 1998. According to Forbes Global 2000 in March 2007, it is the world's largest company, with total assets of US $2.2 trillion (July 2007). The company employs 332,000 staff around the world, and holds over 200 million customer accounts in more than 100 countries. It is a primary dealer in US Treasury securities and its stock has been a component of the Dow Jones Industrial Average since March 17, 1997.History
Citigroup formed on October 8, 1998 following the $140 billion merger of Citicorp and Travelers Group to create the world's largest financial services organization. The history of the company is thus divided into the history of several firms that over time amalgamated into Citicorp - a multinational banking corporation operating in nearly 100 countries; or Travelers Group, whose businesses covered credit services, consumer finance, brokerage and insurance. As such, 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, and Salomon Brothers in 1910.Business Model
Citigroup and its predecessor companies use the 'diversified financial services business model' first invented by Prudential in the late seventies. Simply put, this model attempts to conglomerate many types of finance companies, such as stock brokers, banks, insurance companies, and others. This is done because each of those businesses do better or worse at different times of the business cycle, and so owning all of them balances things out and creates in theory less earnings volatility. This is also done because customers usually use many different kinds of financial products and attempting to convince them to use more products from the same company sells more products more cheaply, compared to those separate companies strictly selling products on their own.During the era of Sandy Weill, much of Citigroup and predecessor's efforts were focused on acquisitions. Much of the efforts were focused in the stock brokerage and investment banking areas, and most of the acquisitions were companies which had recently had problems and were selling at a low price. After the acquisition, the management team would usually engage in aggressive cost cutting to build up cash for the next deal.
The present CEO, Chuck Prince, has said 'the day of the transformative deal (merger) is over'. This is thought to refer to mega deals like the Citicorp/Travelers merger, as Citigroup continues to acquire. The focus of the company though, is said to have changed to organic revenue growth, that is selling more products instead of focusing on acquisitions and cost cutting alone to increase profit.
Citigroup's 2005 sale of the remainder of Travelers Insurance to MetLife was described by the press as the death knell of the bank-insurance cross-selling model. This is a false analysis though, as Citigroup continues to cross sell insurance, but no longer underwrites it. This focus on selling almost all kinds of financial products, but not necessarily 'manufacturing them', is also what prompted Citigroup to recently trade its mutual fund business to Legg Mason in return for more stockbrokers.