} Citigroup Inc. is one of a big financial services company in the world. When of 2005 these are a third big company inside terms of market capitalisation & a 2nd big inside terms of assets. A formatiin of Citigroup was announced on April 7, 1998 through a merger of Citicorp and Travelers Class action. It was a 1st United states company to combine banking sustaining insurance underwriting since a Great Depression. A company has across 275,000 employees & all over 200 million client accounts around Centred countries.

Market share
Although these are one of the big corporations in the globe, Citigroup single got a Five percent spherical market share of its industry in 2003. A financial services sector, though the big industry around terms of earnings, is also a virtually all disunited in terms of corporations. Citigroup experienced the 10% part of the "capital markets & banking" (corporate and investment bank division) in 2003 ([http://www.citigroup.com/citigroup/fin/data/p040602.pdf]). A Thomson Financial League Tables tracks the underwriting & Thousand&A segment of that in more detail.

2003 spherical (except Retail Banking) market part: Capital Mrkts. & Banking: 10% Consumer Finance: 6 Private Client Services: 5 US Retail Banking: 4 Transaction Services: 2 Private Bank: 2

History

A history of a corporation today called Citigroup is primarily the history of its Chairwoman, Sandy Weill, who spun off the consumer finance company known as Commercial Credit from either Control Data Systems, and utilized it to start assembling the mammoth fiscal conglomerate. Consumer Finance is the business of loaning to population by owning unfortunate credit histories at high rate of interest. Occasionally critics own known as this "predatory lending" or "loan sharking". When getting a select few little consumer finance corporations, Commercial Credit acquired a lot big Primerica, and adopted a extra swell known Primerica title for the holding company.

Primericthe was a conglomerate patterned fallowing General Electric by the famous mutual fund manager Gerry Tsai. When GE was doing at a instance, Tsai was trying to position Primerica heavy into a fiscal services realm, getting A L Williams, a controversial MLM insurance agency company, & Smith Barney, a big stock broker. He bought Smith Barney at the height of a bull market, & the ensuant futures market crash put a wow strain on the overall company, forcing him to sell. Tsai experienced inserted moneymaking golden parachutes into his contract agreements because he knew he was going to use at times to sell, which manufactured a treat further expensive than Commercial Credit was uncoerced to pay. Weill was in time positive to last ahead by having a treat becautilize he would so become a cappella to use Primerica's Gulfstream G4 jet, something which a Commercial Credit board of directors was non uncoerced to invite.

Upon getting a company within 1988, Weill spun off a non-financial businesses of a conglomerate, & attempted to institute the practice of "cross-selling" (also known as "cross-servicing"), which he had utilized antecedently at Western Express. Instead of the corporation with the option brokerage, insurance professional, & consumer finance company & allowing the children every rerun basically individually, Weill was interested inside apiece selling from each one others' products. For instance, a insurance broker can sell Smith Barney mutual funds.

In the time of this period Weill became concerned in the Travelers Insurer, which experienced came to Weill for the cash injection because of losses sustained in the period of Hurricane Andrew. Weill as well inserted management into that company to oversee operations & numbers cutting. This yet led to the acquisition of Travelers Insurance.

A Travelers Insurance acquisition added property & casualty, & life & rente underwriting capabilities to the class action. It too brought along a Travelers red umbrella logotype, which Weill applied to all a businesses in the class action. In the period of this instance Travelers acquired Shearson, which was the big option brokerage Weill utilized to start. It so acquired Salomon Brothers, a notable Investment Bank. Weill attempted to negotiate a treat to merge using JP Morgan, however this was rejected because the JP Morgan CEO would stand wanted to turn into CEO of the conjunctive company. Weill was finally successful at convincing John Reed, a CEO of Citicorp, to merge.

Citicorp

Citicorp was the descendent of City National Bank, founded around Up to date York. It was one of a oldest Banks in a United States, & experienced the big international branch presence of any United States headquartered bank. It specialized within big corporate banking, & was one of a big banks in a United States at the instance. A CEO at a period of the merger, John Reed, was instrumental in pushing for the acceptance & utilise of ATMs, and experienced seen the company across a financially bleak cycle once it experienced several problems sustaining international loans defaulting. Reed got been trying to vary a corporate culture of Citicorp, e.g. by hiring power from either consumer product corporations, non banks. Reed felt that a risk to merge using a Travelers Class action would serve burden vary therein front yard.

Merger
A merger took place inside 1998. This was illegal because a leftover provisions of the Glass-Steagall Act (legislation stemming from a United States' Great Depression era) did not allow banks to merge with insurance underwriters. Chuck Prince & his team of attorney, researching a law, uncovered that a Federal Reserve can grant a corporations a both season test period prior to it would use to divest the insurance underwriting business. A CEOs thought that it can vary a law prior to a expiration date. A law was eventually changed within 1999 when Glass-Steagall was invalidated by the passing of the Gramm-Leach-Bliley Financial Services Modernization Act.

Post merger history

Sequentially to convince Citicorp to merge, Weill proposed the structure of co-CEO's, consisting of himself & John Reed. This strategy wwhen denounced immediately by numerous in the click & numerous the food and drug administration analysts as existence impracticable. Previous Treasury Secretary Robert Rubin was brought in as a moderating influence between Weill & Reed, however conflicts in a company one of these days led to Reed existence forced out (though Rubin remains). Additionally, triplet co-CEO's (Jamie Dimon & Deryck Maughnan from either either Travelers, & Victor Menzes from Citicorp) were located within charge of the corporate & investment bank, when ii co-CEO's were set within charge of the consumer class action. This was dubbed "The Noah's ark school of management" per click, & did non endure hanker.

A Traveller's management attempted to implement its culture of prices cutting & cross selling into Citigroup. Citibank retail bankers were instructed for securities & insurance licensed to sell mutual funds & rente. U.s.the. retail banking still, never became a major focus for the company. Todd Thompson, CFO, explained that "the retail branches are mostly a deposit gathering operation used to fund other, higher return, areas". Now instance, its different consumer divisions are non when integrated when more financial institutions, by using every of these primarily heading as a have-alone monoline.

the corporate & investment experienced a other hard instance integrating. There wwhen infighting between corporate bankers & underwriter, as to world health organization would become the primary relationship point of email using a client. Conflicts between a tri-CEO's (including the sottish brush between Dimon & Maugnan at the company retreat) lead to the ouster of Jamie Dimon.

A company shortly acquired Associates Number one Capital, a big consumer finance company, & Banamex, the big bank around Mexico. This was controversial within Mexico, at a period a click there were caring that Mexico's big banks would totally get "branch offices for foreign competitors". Bombs exploded inside branches inside protest.

A company spun off its Travelers Property and Casualty insurance underwriting business because it caused the drag on the Citigroup commodity price due to its earnings existence further seasonal & vulnerable to big disasters. It was as well hard to sell this kindthe insurance directly to client since virtually all industrial client come accustomed to purchasing insurance across a agent. Citigroup retained a life assurance & rente underwriting business. But by 2005, Citigroup decided to sell its life assurance underwriting section to MetLife for the equivalent reasons. Citigroup however heavy sells 100% forms of insurance, however it there are no protracted manufactures (we.e. underwrites) insurance. Citigroup does now, but, locate Travelers' signature red umbrella logotype when its have.

Business model
Citigroup & its predecessor corporations utilise a "diversified financial services business model" first invented by Prudential in the late seventies. Only put, this model tries to conglomerate several types of finance corporations, like option agent, banks, insurer, & others. This is done because both of people businesses run better or even worse at different days of the business cycle, & so with everthing of the babies balances items out and creates around theory less earnings volatility. This is too done becautilize client commonly apply several different rather fiscal products & attempting to convince a children to use further products from either the equivalent company sells supplementary products extra cheaply, in comparisin people separate corporations strictly selling products on their have.

In a period of the era of Sandy Weill, good deal of Citigroup & predecessor's efforts were revolve around acquisitions. Great deal of the efforts were focused in the equity brokerage & investment banking areas, & virtually all of the acquisitions were of corporations which got recently got problems & were selling for a song. Fallowing a acquisition, a management team would unremarkably locate inside aggressive numbers cutting to build higher cash for the next treat.

A present CEO, Chuck Prince, has said "the day of the transformative deal (merger) is over". This is thought to refer to mega deals prefer a Citicorp/Travelers merger, when Citigroup continues to get. A focus of the company though, is said to use changed to organic revenue incubatiin, that is selling additional products instead of focusing on acquisitions & numbers cutting alone to increase profits.

Citigroup's 2005 low of a remainder of Travelers Insurance to MetLife wwhen described per click as the dying knell of the bank-insurance cross-selling model. This occurs when treacherously analysis though as Citigroup continues to cross sell insurance, it upright doesn't underwrite it. This revolve around selling nigh tons sort of fiscal products, but not necessarily "manufacturing them", is as well what prompted Citigroup to recently trade its mutual fund business to Legg Mason reciprocally for extra stockbrokers.

Real estate
Its best known office block is the Citigroup Center, a diagonal-roof skyscraper located in New York City's Midtown Manhattan, although it barely hwhen any office presence around there as its headquarters moved through a prevent to an anin. building on 399 Park Avenue (a places of the original location of the City National Bank). the newly headquarters was outfitted by owning nine luxury dining-room, by owning the team of personal chefs preparing a different menu for every day. the management team is on the third & quaternary floors above a Citibank branch. Smith Barney leases the building in the Tribeca neighborhood in Manhattan, a previous headquarters of the Travelers Class action & renowned for its red umbrella sculpture.

Divisions

Citigroup is divided into different divisions, both which contain numbers of areas of business. A independent divisions come Spherical Consumer, Spherical Corporate & Investment Bank, Personal Client Services, & Spherical Investment management.

A Spherical Consumer Class action is comprised of ternion sub-divisions, Cards (credit cards), Consumer Finance, and Retail Banking. A credit card business on the average delivers all about 40% of the profit of this class action. Citigroup is the big provider of charge card in the globe, the position hanker held by Citicorp, & increased by several acquisitions of card portfolios. It will bring charge plate inside numerous countries potentially in which it doesn't keep close at h& branches, & advertises directly in TV and by directly mail. A Consumer Finance Section (known as Citifinancial) accounts for about 20% of the consumer class action's gains. This section engages in the controversial practice of high rate of interest lending to humans by using bad credit histories, called "loan sharking"Or even "predatory lending" by critics. Although this was a core of a corporation from either either which more divisions were acquired, virtually all of the size & places of this section come from the takeover of Associates First Capital. Citifinancial is nowadays a big consumer finance company in the globe.

A final section is the retail bank. This section consists of the normal retail branch formulas that banks come virtually all known for. This goes per brand "Citibank". Citibank is just about a fifth big retail bank within the United States, & it has branches in countries throughout the world. A large section of retail banking but is Banamex, the big bank inside Mexico, which Citigroup owns. Overall a Spherical Consumer class action contributes to a higher degree half of all the gains for Citigroup. Whenever it were the separate company, it would however exist as in the top tenner virtually all profitable corporations in the globe.

A Spherical Corporate & Investment bank consists of deuce subdivisions, capital markets & banking, and global transaction services. This section fundamentally handles big corporate cash management, lending, & Investment Banking. Citigroup's investment bank is one of a big, oftentimes top-flight numbers of League Tables. It doesn't locate around as much proprietary trading (stock & enthralled speculation) when launder more investment banks. Virtually all of the big scandals of Citigroup develop been from either this section. Citigroup's Global Corporate and Investment Bank headquarters, Tribeca, Manhattan. Investment Management is composed of businesses whose effect depends strongly on the investment decisions of the managers of that business. This section is likewise probably organized to divide higher a labor equally amongst executive management. Involved therein class action is Life Insurance & Annuities (Travelers Insurance), Asset Management (mutual funds), and the Private Bank. Life Insurance & Annuities goes under the brand name Travelers Insurance, and sells those services wholesale through insurance agents and brokers around the world. Asset Management mutual funds come besides sold primarily sweeping, under a br& Salomon Brothers and Smith Barney. A Private Bank is a high end dress shop bank designed to distribute fiscal products to the super flush. Citigroup diarrhea a Common soldier Bank within several countries in which it doesn't keep close at hand normal bank branches.

A final section is known as Personal Client Services, the euphemism for a stock brokerage. This section is branded "Smith Barney", & is the 2nd big commodity agent in the globe. It unremarkably contributes all the same, just around 6% of Citigroup's profit.

Scandals
Citigroup has been exposed inside many scandals. the bit of one come inside specific businesses & come shared amongst more businesses inside that industry, when a select few symptom from either a conflict or even collusion between different divisions of Citigroup. This 2nd nature and severity of scandal keep close at hand driven occasionally to question a "financial supermarket" aspect of Citigroup.

Associates

A number one major scandal of Citigroup was after it acquired a big Consumer Finance company Associates First Capital in 2000. Associates was already under fire for what were known as "predatory lending" practices, specifically the marketing of only premium credit insurance. Upon existence acquired a equivalent attacks were turned towards Citigroup, world health organization stopped a practice of selling a only premium credit insurance, and instituted more changes. In a prevent the company was fined for the previous practices. A present cooperative consumer finance section, known as CitiFinancial continues to part in the general disceptation above consumer finance. Around Will 2004, CitiFinancial was fined $70 million per U.S. Federal Reserve, for continued predatory loaning (described inside detail around [http://www.innercitypress.org/citi.html Inner City Press' Weekly Citigroup Watch Report]).

One-sided research

A next major scandal was a accusation that Citigroup & more investment banks experienced struck secret deals by using corporations that said that a bank's stock research division would rate that company a "Buy" in case it would launder investment banking with that division. Concerned by that scandal was analyst Jack Grubman. This scandal led to occasionally wondering in case a fiscal services conglomerate conception would lead to conflicts of interest like this. A premiss of this wonder still, is considered by a bit of to exist when somewhat flawed insofar as a food and drug administration corporations use all but universally been owned by investment banks, potentially prior to the abrogation of Glass-Steagal. A business firm in time paid a big mulct in the "global settlement" with the state, resultant from either conflicts of interest between search & investment banking at Salomon Smith Barney.

To help put investors at ease, Citigroup leased one of its virtually all outspoken critics, Sallie Krawcheck, to head Smith Barney (currently a pure equity brokerage section), which was separated from either a investment bank inside the corporate structure. It dropped a "Salomon" from either a title, when this title historically denoted investment banking.

Primerica

Primerica is now a trade name given to Citigroup's multi-level-marketing insurance & more fiscal services sales inflict. This section was at one time referred to as The L Williams. Critics call for even it the cult, or criticize its sales practices. Historically a L Williams was the major inflict inside popularizing Term Life Insurance. Look at a Primerica article for more details.

Enron, & Parmalat

Citigroup was too accused of helping Enron and other corporations hide their losses by loaning money to people corporations inside the favorite way that would reduce liabilities seeable on the balance sheet. Around Could 2004 a company agreed to pay $2.65 billion, or even $1.64 billion after tax, to settle a class action lawsuit brought on behalf of buyer of WorldCom securities.

Japan Personal Banking Scandal Citigroup flushed troikthe senior executives in the wake up of a banking scandal in Japan. A scandal required a Private Bank, the section that deals by owning super affluent client. It was alleged that a Buck private Bank failed to watch certaaround anti-money laundering procedures, that it used deceptive sales manoeuvre, & that it assisted a client in doing dealing which disrupted the fiscal markets or even were deceitful. This caused the Japanese regulators to close the Buck private Bank.

Deryck Maughan, a Citigroup vice chairman & head of Citigroup International, Thomas W. Jones, chairman and chief executive of the global investment management division, and Peter K. Scaturro, head of Citi's private bank, left the company. Maughan got been by owning Citigroup & its predecessor Salomon Brothers since 1983. Jones & Scaturro were each members of the Citigroup management committee. The memoranda from either Chief Executive Charles Prince said that Citigroup President Robert B. Willumstad would take charge of the businesses run by the three departing executives.

Citigroup Proprietary Government Bond-trading activity Scandal Citigroup was critized per European Financial Governmence institutes for disrupting the European bond market by rapidly selling €11 billiin worth of bonds on August 2 2004 on the MTS Group trading platform, driving down the price, and so pip out back at inexpensive cost. An investigation is pending. Relatedly, a U.S. Federal Reserve refused to rule in Citigroup's application to get 1st U.s. Bank around Texas, from either September 2004 across March 2005 (described inside detail within [http://www.innercitypress.org/citi.html Inner City Press' Weekly Citigroup Watch Report]).

Improper Assessment lately Fees Besides inside 2001 Citibank settled the causa for improperly assessing late fees. A class-action suit case was for 45 million dollars. Resulting this Citibank lobbied within Congress, to pass legislatiin that would set boundaries class-action suit cause to Five million dollars unless it were initiated on the federal level (Group Fairness Work of 2005). Numerous consumer advocate websites report that Citibank is however improperly assessing late fees.

Brands
Citibank, providing consumer banking products. Citimortage, Mortgage Lender Citifinancial, Consumer finance aka sub-prime lending Diner's Club International, credit cards. Grupo Financiero Banamex, largest Mexico bank Primerica, engages in multi-level-marketing of financial services SmithBarney, investment services, both retail good service brokerage, private client services, and once a marque utilized for the Investment bank Travelers Life & Annuity, insurance services.