Citi Splits 'Supermarket' after $8.9m fourth quarter Loss
New York - Citigroup has posted a fourth quarter loss of $8.9 billion, making for overall losses of $18.7 billion for 2008, and announced the splitting of its businesses. Citi received an initial government cash infusion of $25 billion as part of the US government's Troubled Asset Relief Program in October, but it received a further regulatory warning in late November, when its plummeting share price prompted the government to give it a second injection of $27 billion.
In 1998, former chairman, Sanford Weill merged insurance firm Travelers Group with Citi, then the largest US bank. Weill's successor, Charles Prince, departed in December 2007 when the current chairman Vikram Pandit took over. The division of Citi's troubled empire after 52,000 job losses in 2008 effectively marks the end of the firm's cherished 'financial supermarket'.
Citigroup chief executive William Smith said the bank embarked on the right strategy at the wrong time - having missed the opportunity two years ago to streamline its extensive businesses. Citi's huge retail brokerage Smith Barney will separate from the firm, after Morgan Stanley agreed to buy a 51% share in the brokerage for $2.7 billion, with allowance to purchase the rest of the business in three years' time at a price to be agreed then. The sale is a particular blow to Citi as Smith Barney has remained one of its most profitable businesses since the financial crisis. The Morgan Stanley-Smith Barney combined brokerage will include around 19,000-20,000 brokers and 1,000 retail offices.
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 info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net 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 info@risk.net
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 info@risk.net
More on Regulation
Prop shops recoil from EU’s ‘ill-fitting’ capital regime
Large proprietary trading firms complain they are subject to hand-me-down rules originally designed for banks
Revealed: the three EU banks applying for IMA approval
BNP Paribas, Deutsche Bank and Intesa Sanpaolo ask ECB to use internal models for FRTB
FCA presses UK non-banks to put their affairs in order
Greater scrutiny of wind-down plans by regulator could alter capital and liquidity requirements
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management