Citigroup

It usually contributes however, only around 6% of Citigroup's profits. ISBN 0316643734. This division is branded "Smith Barney", and is the second largest stock broker in the world. 1999. The final division is called Private Client Services, a euphemism for a stock brokerage. Little, Brown and Company. Citigroup runs the Private Bank in many countries where it doesn't have normal bank branches. Lisa Endlich.

The Private Bank is a high end boutique bank designed to distribute financial products to the very wealthy. Goldman Sachs: The Culture of Success. Asset Management mutual funds are also sold primarily wholesale, under the brand names Salomon Brothers and Smith Barney. In addition, the company was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine. Life Insurance & Annuities goes under the brand name Travelers Insurance, and sells those services wholesale through insurance agents and brokers around the world. Goldman Sachs received a 100% rating on the Corporate Equality Index released by the Human Rights Campaign starting in 2004, the third year of the report. Included in this group is Life Insurance & Annuities (Travelers Insurance), Asset Management (mutual funds), and the Private Bank. In 2005, Goldman Sachs Execution & Clearing LP was fined US$ 1 million by NASD for hiding IPO allocations from the Depository Trust Corporation.

This division is also probably organized to divide up the labor equally amongst executive management. Spear Leeds, a firm Goldman Sachs bought in 2000 and renamed as Goldman Sachs Execution & Clearing LP, had to pay US$ 45.3 million to the National Association of Securities Dealers (NASD) in 2004 to settle charges that it traded ahead of customers. Investment Management is composed of businesses whose outcome depends strongly on the investment decisions of the managers of that business. Goldman Sachs also raked in hundreds of millions in fees for underwriting companies like PlanetRx.com, Webvan, etc., which later went bankrupt. Most of the largest scandals of Citigroup have been from this division. The SEC also alleged that Goldman Sachs spoke to the media about an IPO by PetroChina before an initial registration was filed. It does not engage in as much proprietary trading (stock and bond speculation) as do other investment banks. In 2004, Goldman Sachs agreed to pay US$ 2 million to the Securities and Exchange Commission (SEC) for settling charges of promoting an IPO before the IPO registration became effective.

Citigroup's investment bank is one of the largest, frequently topping many League Tables. In 2003, the company agreed to pay US$ 4.3 million in restitution and a US$ 5 million in penalty related to improper trading in US Treasury Securities and futures. This division essentially handles large corporate cash management, lending, and Investment Banking. In 2003, Goldman Sachs paid US$ 110 million as part of the settlement over research improprieties when New York State Attorney General, Eliot Spitzer, fined Wall Street for bad behavior. The Global Corporate and Investment bank consists of two subdivisions, capital markets & banking, and global transaction services. In 2002, Goldman Sachs paid US$ 1.65 million in fines for allegedly violating e-mail record keeping requirements. If it were a separate company, it would still be in the top ten most profitable companies in the world. Donaldson fined Goldman-Sachs US$110m, and the investment banks as a whole $1.4bn ([4]) in the so called "global settlement".

Overall the Global Consumer group contributes more than half of all the profits for Citigroup. The Financial Times called it "the worst financial scandal in a generation". The biggest part of retail banking however is Banamex, the largest bank in Mexico, which Citigroup owns. An analyst, Craig Kloner, when asked what his three most important goals for 2000 were, said "to get more investment banking revenue" ([2]) ([3]). Citibank is about the fifth largest retail bank in the United States, and it has branches in countries throughout the world. In a statement issued by William Donaldson, chairman of the US securities and exchange commission on October 31st 2003, he said Bear Stearns, Credit Suisse First Boston, Goldman Sachs, Lehman Brothers, Merrill Lynch, Piper Jaffray, Salomon Smith Barney, and UBS Warburg (now known as UBS Securities) ("UBS") issued research reports that were not based on principles of fair dealing and good faith and did not provide a sound basis for evaluating facts, contained exaggerated or unwarranted claims about the covered companies, and/or contained opinions for which there were no reasonable bases in violation of New York Stock Exchange ("NYSE") Rules 401, 472 and 476(a)(6), and NASD, Inc., Rules 2110 and 2210 as well as state ethics statutes. This goes by the brand name "Citibank". Titled The Secretary Who Stole £4 Million, it starred Meera Syal as Joyti De-Laurey, and featured contributions from her friends, family and co-workers.

This division consists of the normal retail branch system that banks are most known for. De-Laurey's story was made into a television movie broadcast by the BBC on June 8, 2005. The final division is the retail bank. Sophie Pemberton, who is another employee of Mead's, stated that Mead "never signed anything" and that she regularly forged his signature. Citifinancial is now the largest consumer finance company in the world. Also, claims that forgeries were exceptional are questionable as another witness to the case, Ms. Although this was the core of the corporation from which other divisions were acquired, most of the size and stores of this division came from the takeover of Associates First Capital. Critics have suggested that the case has been over-stated, as forging cheques does not require exceptional intelligence.

This division engages in the controversial practice of high interest rate lending to people with bad credit histories, called "loan sharking" or "predatory lending" by critics. She also worked for Jennifer Beller. The Consumer Finance Division (called Citifinancial) accounts for about 20% of the consumer group's profits. Another previous boss of hers, Ron Beller said she was "a very clever con artist". It provides credit cards in many countries even where it doesn't have branches, and advertises directly on TV and by direct mail. The Financial Times called her a "queen of deceit", Scott Mead, the executive whose signature De-Laurey forged, called her a "Picasso of con-men— she was brilliant". Citigroup is the largest provider of credit cards in the world, a position long held by Citicorp, and increased by many acquisitions of card portfolios. A spokesman for Goldman Sachs described the thefts as "gross abuse of trust and an extremely unpleasant incident for all those affected".

The credit card business on average delivers about 40% of the profits of this group. Joyti De-Laurey was convicted eleven to one in April 2004 by a UK jury for stealing more than £4m by forging cheques. The Global Consumer Group is comprised of three sub-divisions, Cards (credit cards), Consumer Finance, and Retail Banking. Apart from political careers, alumni of Goldman Sachs seek entrepreneurship and excel there:. The main divisions are Global Consumer, Global Corporate and Investment Bank, Private Client Services, and Global Investment management. Another former partner, Jack Ryan (Senate candidate), withdrew from his bid for the open United States Senate seat in Illinois after embarrassing allegations about his sexual past. Citigroup is divided into different divisions, each which contain many areas of business. Bush's National Economic Council, incidentally the position Rubin held before moving to Treasury.

. Also, Steven Friedman was Chairman of George W. Smith Barney leases a building in the Tribeca neighborhood in Manhattan, the former headquarters of the Travelers Group and famous for its red umbrella sculpture. Many former partners of Goldman Sachs have gone on to hold prominent public positions including Robert Rubin the United States Secretary of the Treasury under Bill Clinton, Jon Corzine currently a United States Senator from New Jersey, and John Thain currently the CEO of the New York Stock Exchange. The management team is on the third and fourth floors above a Citibank branch. They commited Goldman Sachs to expand internationally. The new headquarters was outfitted with nine luxury dining rooms, with a team of private chefs preparing a different menu for each day. John Whitehead and Weinbergs son next took over.

Its most famous office building is the Citigroup Center, a diagonal-roof skyscraper located in New York City's Midtown Manhattan, although it barely has any office presence in there as its headquarters moved across the block to an anonymous building on 399 Park Avenue (the site of the original location of the City National Bank). He came from the firms trading department, and got Goldman Sachs into the business of trading for its own profit (its major source of profit today). This focus on selling almost all kinds of financial products, but not necessarily "manufacturing them", is also what prompted Citigroup to recently trade its mutual fund business to Legg Mason in return for more stockbrokers. Gustave Levy took over after Weinberg. This is a false analysis though as Citigroup continues to cross sell insurance, it just doesn't underwrite it. This had never been done before in investment banking. Citigroup's 2005 sale of the remainder of Travelers Insurance to MetLife was described by the press as the death knell of the bank-insurance cross-selling model. Others at Goldman realized that essentially all new business was brought in from Weinberg, and so instituted an outbound sales force to attempt to become less reliant on Weinberg.

The focus of the company though, is said to have changed to organic revenue growth, that is selling more products instead of focusing on acquisitions and cost cutting alone to increase profit. This was a major coup for the company which enhanced its reputation greatly. This is thought to refer to mega deals like the Citicorp/Travelers merger, as Citigroup continues to acquire. His close friendship with the Ford family allowed Goldman Sachs to arrange for the Ford IPO, the largest in the world at that time. The present CEO, Chuck Prince, has said "the day of the transformative deal (merger) is over". He was a relentless salesman, trying to befriend as many leaders of top businesses and governments as possible. After the acquisition, the management team would usually engage in aggressive cost cutting to build up cash for the next deal. Sydney Weinberg became the head of Goldman Sachs.

Much of the efforts were focused in the stock brokerage and investment banking areas, and most of the acquisitions were of companies which had recently had problems and were selling at a low price. This damaged its repuation for a long time. During the era of Sandy Weill, much of Citigroup and predecessor's efforts were focused on acquisitions. It grew organically from this base, but suffered a major setback when it setup what would be called today a giant hedge fund (Goldman Sachs Trading Co.) in 1929 which crashed in the resulting great depression. This is also done because customers usually use many different kinds of financial products and attempting to convince them to use more products from the same company sells more products more cheaply, compared to those separate companies strictly selling products on their own. Goldman Sachs was founded by Marcus Goldman as a business which assisted other businesses in borrowing money via commercial paper (very short term loans). This is done because each of those businesses do better or worse at different times of the business cycle, and so owning all of them balances things out and creates in theory less earnings volatility. "Securities services" is mostly a reference to Prime brokerage, which is a stock brokerage for hedge funds that executes many trades and is a particularly profitable division within Goldman Sachs.

Simply put, this model attempts to conglomerate many types of finance companies, such as stock brokers, banks, insurance companies, and others. This segment accounts for around 19 percent of Goldman's earnings. Citigroup and its predecessor companies use the "diversified financial services business model" first invented by Prudential in the late seventies. "Asset Management" is an industry term for mutual funds, of which Goldman runs many. Many consumer advocate websites report that Citibank is still improperly accessing late fees. The final segment is Asset Management and securities services. Following this Citibank lobbied in Congress (who they give large donations to), to pass legislation that would limit class action lawsuits to 5 million dollars unless they were initiated on a federal level (Class Action Fairness Act of 2005). The opposite has been true, however.

The class action lawsuit was for 45 million dollars. Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. Improper Assessment of Late Fees Also in 2001 Citibank settled a lawsuit for improperly assessing late fees. Around 65 percent of Goldman's revenues and profits are from this area. Federal Reserve refused to rule on Citigroup's application to acquire First American Bank in Texas, from September 2004 through March 2005 (described in detail in Inner City Press' Weekly Citigroup Watch Report). Like the rest of the Investment Banking industry, this occurs primarily in the bond market. Relatedly, the U.S. Most trading done by Goldman is not a "bet" of a particular outcome in the market, but rather attempting to sell something for an incrementally greater amount of money it was forced to buy something for, in the process of acting as a market maker.

An investigation is pending. Many trades however are done for both reasons. Citigroup Proprietary Government Bond Trading Scandal Citigroup was critized by the European Financial Governmence institutes for disrupting the European bond market by rapidly selling €11 billion worth of bonds on August 2, 2004 on the MTS Group trading platform, driving down the price, and then buying it back at cheaper prices. This segment consists of the revenues and profit gained from the Bank's trading activities, both on behalf of its clients and for its own account (called proprietary trading). Willumstad would take charge of the businesses run by the three departing executives. Trading and Principal Investments is the largest segment and profit center for Goldman. A memo from Chief Executive Charles Prince said that Citigroup President Robert B. This segment accounts for around 15 percent of Goldman Sach's revenues.

Jones and Scaturro were both members of the Citigroup management committee. Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a hostile takeover, which increased the firm's reputation immensely. Maughan had been with Citigroup and its predecessor Salomon Brothers since 1983. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid a hostile takeover. Scaturro, head of Citi's private bank, left the company. Goldman Sachs is one of the leading investment banks, topping the league tables many times, especially in equity operations. Jones, chairman and chief executive of the global investment management division, and Peter K. Investment Banking includes traditional investment banking, and mergers and acquisitions (M&A) advisory.

Deryck Maughan, a Citigroup vice chairman and head of Citigroup International, Thomas W. Goldman Sachs is divided into three different lines of business: Investment Banking, Trading and Principal Investments, and Asset Management and securities services. This caused the Japanese regulators to shut down the Private Bank. . It was alleged that the Private Bank failed to follow certain anti-money laundering procedures, that it used deceptive sales tactics, and that it assisted a customer in doing transactions which disrupted the financial markets or were fraudulent. In fact, investment banking accounts for only 5 percent of Goldman's profits. The scandal involved the Private Bank, the division that deals with very wealthy customers. Its largest area of activity is proprietary trading, that is, executing trades for its own profit with its own money.

Japan Private Banking Scandal Citigroup removed three senior executives in the wake of a banking scandal in Japan. Goldman is mostly involved in wholesale financial services, although it has a newer and growing Private Client Services arm. In May 2004 the company agreed to pay $2.65 billion, or $1.64 billion after tax, to settle a class action lawsuit brought on behalf of purchasers of WorldCom securities. New York City, Frankfurt, London, Hong Kong and Tokyo. Citigroup was also accused of helping Enron and other companies hide their losses by loaning money to those companies in a special way that would reduce liabilities visible on the balance sheet. Headquartered in downtown New York City at 85 Broad Street ([1]), Goldman operates globally with offices in leading financial centers, e.g. Enron, and Parmalat. The firm was founded in 1869.

See the Primerica article for more details. NYSE: GS (referred to as GS, or just Goldman) is an investment bank. Historically A L Williams was the major force in popularizing Term Life Insurance. The Goldman Sachs Group, Inc. Critics call it a cult, or criticize its sales practices. Edward S Lampert, a former protégé of Robert Rubin and founder of ESL Investments, is a member of the Forbes 400. This division was formerly known as A L Williams. Flowers & Company, he is a member of the Forbes 400 list.

Primerica is now the brand name given to Citigroup's multi-level-marketing insurance and other financial services sales force. J Christopher Flowers, a former partner who set up J.C. Primerica. The CEO is Hank Paulson. It dropped the "Salomon" from the name, as this name historically denoted investment banking. Pre-tax earnings in the 2003 fiscal year ending November 30 were $4.445 billion. To help put investors at ease, Citigroup hired one of its most outspoken critics, Sallie Krawcheck, to head Smith Barney (now a pure stock brokerage division), which was separated from the investment bank within the corporate structure. Employed 20,722 people at the end of November 2004.

The firm eventually paid the largest fine in the "global settlement" with the state, resulting from conflicts of interest between research and investment banking at Salomon Smith Barney. The premise of this question however, is considered by some to be somewhat flawed insofar as research companies have almost always been owned by investment banks, even before the repeal of Glass-Steagal. This scandal led to some wondering if the financial services conglomerate concept would lead to conflicts of interest such as this. Implicated by that scandal was analyst Jack Grubman.

The next major scandal was the accusation that Citigroup and other investment banks had struck secret deals with companies that said that the bank's stock research division would rate that company a "Buy" if it would do investment banking with that division. Biased research. Federal Reserve, for continued predatory lending (described in detail in Inner City Press' Weekly Citigroup Watch Report). In May 2004, CitiFinancial was fined $70 million by the U.S.

The present combined consumer finance division, called CitiFinancial continues to share in the general controversy over consumer finance. In the end the company was fined for the former practices. Upon being acquired the same attacks were turned towards Citigroup, who stopped the practice of selling the single premium credit insurance, and instituted other changes. Associates was already under attack for what were called "predatory lending" practices, specifically the selling of single premium credit insurance.

The first major scandal of Citigroup was when it acquired the largest Consumer Finance company Associates First Capital in 2000. Associates. This second type of scandal have caused some to call into question the "financial supermarket" aspect of Citigroup. Some of these are in specific businesses and are shared amongst other businesses within that industry, while some result from a conflict or collusion between different divisions of Citigroup.

Citigroup has been involved in several scandals. Citigroup does today, however, retain Travelers' signature red umbrella logo as its own. underwrites) insurance. Citigroup still heavily sells all forms of insurance, but it no longer manufactures (i.e.

However by 2005, Citigroup decided to sell its life insurance underwriting division to MetLife for the same reasons. Citigroup retained the life insurance and annuities underwriting business. It was also difficult to sell this kind of insurance directly to customers since most industrial customers are accustomed to purchasing insurance through a broker. The company spun off its Travelers Property and Casualty insurance underwriting business because it caused a drag on the Citigroup stock price due to its earnings being more seasonal and vulnerable to large disasters.

Bombs exploded in branches in protest. This was controversial in Mexico, at the time the press there were worried that Mexico's largest banks would all become "branch offices for foreign competitors". The company soon acquired Associates First Capital, the largest consumer finance company, and Banamex, the largest bank in Mexico. Conflicts between the tri-CEO's (including a drunken skirmish between Dimon and Maugnan at a company retreat) lead to the ouster of Jamie Dimon.

There was infighting between corporate bankers and investment bankers, as to who would be the primary relationship point of contact with a customer. The corporate and investment had a more difficult time integrating. At present time, its different consumer divisions are not as integrated as other financial institutions, with each one primarily running as a stand-alone monoline. Todd Thompson, CFO, explained that "the retail branches are mostly a deposit gathering operation used to fund other, higher return, areas".

US retail banking however, never became a major focus for the company. Citibank retail bankers were instructed to get securities and insurance licensed to sell mutual funds and annuities. The Traveler's management attempted to implement its culture of cost cutting and cross selling into Citigroup. This was dubbed "The Noah's ark school of management" by the press, and did not last long.

In addition, three co-CEO's (Jamie Dimon and Deryck Maughnan from Travelers, and Victor Menzes from Citicorp) were placed in charge of the corporate and investment bank, while two co-CEO's were placed in charge of the consumer group. Former Treasury Secretary Robert Rubin was brought in as a moderating influence between Weill and Reed, but conflicts within the company eventually led to Reed being forced out (though Rubin remains). This strategy was denounced immediately by many in the press and many research analysts as being unworkable. In order to convince Citicorp to merge, Weill proposed a structure of co-CEO's, consisting of himself and John Reed.

The law was finally changed in 1999 when Glass-Steagall was invalidated by the passing of the Gramm-Leach-Bliley Financial Services Modernization Act. The CEOs thought that they could change the law before the expiration date. Chuck Prince and his team of lawyers, studying the law, found that the Federal Reserve could grant the companies a two year trial period before they would have to divest the insurance underwriting business. This was illegal because the remaining provisions of the Glass-Steagall Act (legislation stemming from the United States' Great Depression era) did not allow banks to merge with insurance underwriters.

The merger took place in 1998. Reed felt that the chance to merge with the Travelers Group would help effect change in this area. Reed had been trying to change the corporate culture of Citicorp, for example by hiring top executives from consumer product companies, not banks. The CEO at the time of the merger, John Reed, was instrumental in pushing for the acceptance and use of ATMs, and had seen the company through a financially bleak period when it had many problems with international loans defaulting.

It specialized in large corporate banking, and was one of the largest banks in the United States at the time. It was one of the oldest Banks in the United States, and had the largest international branch presence of any United States headquartered bank. Citicorp was the descendant of City National Bank, founded in New York. Weill was eventually successful at convincing John Reed, the CEO of Citicorp, to merge.

Weill attempted to negotiate a deal to merge with JP Morgan, but this was rejected because the JP Morgan CEO would have wanted to become CEO of the combined company. It then acquired Salomon Brothers, a famous Investment Bank. During this time Travelers acquired Shearson, which was a large stock brokerage Weill used to run. It also brought along the Travelers red umbrella logo, which Weill applied to all the businesses within the group.

The Travelers Insurance acquisition added property and casualty, and life and annuities underwriting capabilities to the group. This eventually led to the acquisition of Travelers Insurance. Weill also inserted management into that company to oversee operations and cost cutting. During this period Weill became interested in the Travelers Insurance company, which had come to Weill for a cash injection because of losses sustained during Hurricane Andrew.

For example, the insurance agents could sell Smith Barney mutual funds. Instead of the corporation owning a stock brokerage, insurance agency, and consumer finance company and letting them each run essentially separately, Weill was interested in each selling each others' products. Upon acquiring the company in 1988, Weill spun off the non-financial businesses of the conglomerate, and attempted to institute the practice of "cross-selling" (also called "cross-servicing"), which he had used previously at American Express. Weill was eventually convinced to go ahead with the deal because he would then be able to use Primerica's Gulfstream G4 jet, something which the Commercial Credit board of directors was not willing to pay for.

Tsai had inserted lucrative golden parachutes into his contract agreements because he knew he was going to have to sell, which made the deal more expensive than Commercial Credit was willing to pay. He bought Smith Barney at the height of a bull market, and the resulting stock market crash put a tremendous strain on the overall company, forcing him to sell. As GE was doing at the time, Tsai was trying to position Primerica heavily into the financial services realm, acquiring A L Williams, a controversial MLM insurance agency company, and Smith Barney, a large stock broker. Primerica was a conglomerate patterned after General Electric by the famous mutual fund manager Gerry Tsai.

After acquiring some small consumer finance companies, Commercial Credit acquired the much larger Primerica, and adopted the more well known Primerica name for the holding company. Some critics have called this "predatory lending" or "loan sharking". Consumer Finance is the business of lending to people with poor credit histories at high interest rates. The history of the corporation now known as Citigroup is primarily the history of its Chairman, Sandy Weill, who spun off a consumer finance company known as Commercial Credit from Control Data Systems, and used it to begin assembling a gigantic financial conglomerate.

2003 global (except Retail Banking) market share:. The Thomson Financial League Tables tracks the underwriting and M&A segment of that in more detail. Citigroup had a 10% share of the "capital markets & banking" (corporate and investment bank division) in 2003 ([1]). The financial services sector, though the largest industry in terms of earnings, is also the most fragmented in terms of companies.

Although it is one of the largest companies in the world, Citigroup only had a 5 percent global market share of its industry in 2003. . The company has over 275,000 employees and over 200 million customer accounts in 100 countries. It was the first US company to combine banking with insurance underwriting since the Great Depression.

The formation of Citigroup was announced on April 7, 1998 through a merger of Citicorp and Travelers Group. As of 2005 it is the third largest company in terms of market capitalization and the largest in terms of assets. NYSE: C is the largest financial services company in the world. Citigroup Inc.

Travelers Life & Annuity, insurance services. SmithBarney, investment services, both retail full service brokerage, private client services, and formerly the brand name used for the Investment bank. Primerica, engages in multi-level-marketing of financial services. Grupo Financiero Banamex, largest Mexico bank.

Diner's Club International, credit cards. Citifinancial, Consumer finance aka sub-prime lending. Citimortage, Mortgage Lender. Citibank, provinding consumer banking products.

Private Bank: 2. Transaction Services: 2. US Retail Banking: 4. Private Client Services: 5.

Consumer Finance: 6. & Banking: 10%. Capital Mrkts.