I could have done “Citibank in the Tank” but I find poop to be one of the greatest words in the English language. Citi has had a rough time since losing the battle for Wachovia back in 2008. If you don’t remember, Citi swooped with an offer to save Wachovia. Wachovia accepted the proposal, but got drunk and ran away with Wells Fargo the night before the wedding. What we didn’t know at the time, was Citi needed that merger to qualify for additional funding from the government. Once it fell through, so did Citi. They have required more government assistance than the others.
Citi has now been forced to sell it’s brokerage services, known as Smith Barney, to Morgan Stanley. The new unit will be Morgan Stanley Smith Barney (how original). The bank has always been a conglomerate, but never been able to consolidate businesses from all their mergers and acquisitions. It would have undone them at some point, the credit crunch just hurried on the matter. Citi is expected to reduce itself down to a core operating model, “getting banks to its roots,” so to speak.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
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Citi has needed to return to its core business of baking for years. There was no true growth in the company’s profits except for the artificial growth achieved through acquisitions. Citigroup needs to prove that they can be a viable commercial bank.