Citigroup Shifts Strategy After Turbulent History
- Citigroup has had a turbulent history, with its stock dropping over 30% in the last 5 years
- Jane Fraser, CEO of Citigroup, announced a shift in strategy in April 2021, exiting retail markets outside of the US and focusing on wealth management instead
- 4 executives referred to overseas businesses as melting ice cubes due to their decreasing value
- Citi’s new strategy seeks to simplify down their business and return to its former glory before the merger with Travelers Group in 1998
- Before the financial crisis Citi was fairly aggressive in loading up on subprime mortgages and other risky assets that soon became toxic.
Citi Struggles to Recover After 2008 Crisis Despite Marginal Profitability
- Citi has not recovered in the market since the 2008 financial crisis
- Despite being consistently profitable, they have only been marginally so with a low price to tangible book value of 0.5 compared to their peers at 1-2
- Revenue mainly comes from two sources – Institutional Clients Group (54.7%) and Personal Banking & Wealth Management (32.1%)
- Citi’s Global Wealth Management has seen revenue fall 5% in 2023 due to a decline in investment banking and divestitures
- Bank of America’s Merrill Lynch had an asset size of $2.8 trillion compared to Citi’s $746 billion
- Citi is attempting to rebuild its Wealth Management business but it is yet to be seen if this will prove successful
- The key to success is for Citi to show sustainable growth by divesting from losers and investing in winners.