
The puzzle of Citigroup
EDITORIAL LETTER | ELLEN DAVIS
And yet Citigroup revenues were up 11% to a whopping $86 billion for 2004, with healthy gains for both corporate and retail banking. So what gives?
In 2003, when Citigroup settled the Enron fiasco, it had an agreement with the Federal Reserve Bank of New York to put in place, among other things, a reputational risk management strategy. Indeed, regulators are now actively encouraging all banks to follow suit.
This creates an interesting contradiction. If firms put in place reputational risk programmes, will they lose the incentive to behave themselves? If they can spin themselves out of trouble with the right noises and gestures, then the logic behind Basel IIPillar III -- market discipline -- is likely to be much less effective. Stock prices won’t plummet and consumers won’t run away.
Regulators must ensure the long-term stability of a financial system by making sure large banks manage their reputations. But if they are managed, then are transgressions punished?
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact [email protected] to find out more.
You are currently unable to copy this content. Please contact [email protected] to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email [email protected]
More on Structured products
Derivatives
Callable repack frenzy opens up new options market in Europe
Demand driven mainly by French life insurers looking for alternatives to low-yielding sovereign bonds
Receive this by email