Citigroup Case

Background of Citigroup

Citigroup Inc. is an American multi-national financial services corporation headquartered in Manhattan, New York City, New York. The City Bank of New York was formed on June 16th, 1812, after overcoming many obstacles and political maneuverings in their time. At this point in history it was led by Samuel Osgood, a well-rounded statesman who believed in expanding trade across borders. The bank allowed New York to compete with Boston, Baltimore, and Philadelphia for the nation's business. By the end of the first year in business, Citigroup had a capital dollar amount of $2 million with 22 employees and one single branch in operation. Then, 50 years later, Citigroup grew to having 31 employees with $12.4 million in capital. ("Citigroup Inc.,")

Finally hitting the milestone between 1912 and 1922, Citigroup went from having one single branch to having close to 60 branches. The amount of growth that Citigroup took on in only 10 years was outstanding for that time period, and even today. They also grew from having 22 employees their first year in business to around 6,000 in 1912. From then forward, Citigroup continued to grow at a rapid rate, creating the name and reputation they have today. As of 2012, Citigroup has $1.9 trillion in capital with 260,000 employees in 117 countries consisting of over 4,500 branches around the world. Today, Citigroup has approximately 200 million customer accounts ranging over roughly 120 different countries. ("Citigroup Inc.,")

Citigroup incorporated on March 3, 1988 as a global diversified financial services holding company whose businesses provide consumers, corporations, governments, and institutions with a broad range of financial products and services. Citi's Global Consumer Banking business is among the largest of retail banks in the world. As stated on the corporate website, Citigroup is primarily known as Citibank and strategically centered in the world's top cities. Global Consumer Banking uses its deep footprint to deliver a consistent and enhanced client-centric banking experience. As of 2011, Global Consumer Banking accounted for nearly 40 percent of total deposits and 50 percent of total revenues within Citigroup. ("Citigroup Inc.,")

The Federal Reserve reported on March 13, 2012, that Citigroup is one of the four financial institutions, out of 19 major banks, that have failed its stress tests. These tests are designed to ensure banks have enough capital to withstand any substantial amount of losses in a financial crisis such as the one Citigroup faced in 2008 when they almost collapsed. The 2012 stress tests determined whether banks could withstand a financial crisis that has an unemployment rate of around 13%, stock prices cut in half, and home prices decreasing by 21 percent from current levels. ("Citigroup Inc.,")

According to the reports issued by the Federal Reserve, Citigroup failed the stress tests due to their high capital return plan and its international loans rated by the Fed to be at higher risk than its domestic American loans. Citigroup gets half their revenues from its international businesses. In comparison, Bank of America, which passed the stress test and did not ask for a capital return to investors, gets 78% of its revenue in the United States.

Market Activity

In reference to Citigroup and their current market standings, the company has a price that is currently hovering around $45 per share. When looking at the past 3 months, the stock has done moderately well. The 3 month range for Citigroup has a low of $41.15 and a high of $47.60. When looking at the 52 week range, the 52 week high is $47.97 and the 52 week low is 24.61. This huge jump in range tells us the strength that this bank has and the ability they have to pull out of periods of big time losses, such as the one Citigroup recently had in the 2008 financial crisis. ("Morningstar, Citigroup")

Citigroup suffered huge losses during the global financial crisis of 2008 and was rescued in November 2008 in a massive stimulus package by the U.S. government. Its largest shareholders include funds from the Middle East and Singapore. On February 27, 2009, Citigroup announced that the United States government would take a 36% equity stake in the company by converting $25 billion in emergency aid into common shares with a US Treasury credit line of $45 billion to prevent the bankruptcy of the largest bank in the world at the time. Today, Citigroup is ranked 20th in size under the U.S. Fortune 500 list. In comparison, JPMorgan Chase, which is ranked 16th on the Fortune 500, is now the largest bank in the U.S. as of 2012. ("Citigroup Inc. market risk")

Citigroup operates in two segments: Citicorp, consisting of Citigroup's Global Consumer Banking businesses and Institutional Clients Group and Citi Holdings, consisting of Brokerage and Asset Management, Local Consumer Lending and Special Asset Pool. Global Consumer Banking which included retail banking and Citi-branded cards in four regions: North America, Europe, Middle East, Africa, Latin America, and Asia and Institutional Clients Group. Institutional Clients Group includes Securities and Banking and Transaction Services. On April 28, 2011, Egg Banking PLC, an indirect subsidiary which was part of the Citi Holdings segment, sold its credit card business to Barclays PLC. Then, in February 2012, the company sold its 9.85% interest in Housing Development Finance Corporation. In May 2012, the company sold 10.1% interest in Akbank which is based in Turkey. ("Citigroup Inc. market risk, Reuters")

Subsidiaries

There are two types of subsidiaries that are recorded by Citigroup. The first is bank holding companies. Citigroup has three associated institutions. They recorded a combined bank/ thrift subsidiary deposits of around $416 billion as of December 31, 2012 and a combined bank/ thrift subsidiary assets of $1.3 trillion also on December 31, 2012. Citigroup also has a number of non-bank subsidiaries. Their equity in un-distributed income, meaning losses, of subsidiaries and associated companies is around $4 billion in non-bank and $7 billion in subsidiary bank holding companies. Citigroup also has non-bank subsidiaries in which they recorded a total combined non- bank assets of nonbank subsidiaries at $557.5 billion. ("Citigroup Inc.,")

Corporate Culture

When it comes to the corporate culture of Citigroup, this company has a very good and long lasting set of relationships within the company. Being formed in 1812, this company has many people within the corporate ladder who have been there