Citi Group Restructuring

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  • Topic: Citigroup, Morgan Stanley Smith Barney, Financial services
  • Pages : 3 (826 words )
  • Download(s) : 187
  • Published : April 18, 2013
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Background
It all began with the financial crisis of 2007-2008, a crisis which was of a scale that had never been seen before. Many economists called it even worse than the Great Depression. Whether it was or not, that’s something that could be argued. But everyone was of the view that the crisis is really very serious. As a result of it large financial institutions collapsed, banks were being bailed out by the national governments and stock markets tanked to their new lows. This caused the collapse of housing markets in many countries, consumer spending suffered immensely as a result, industries went bankrupt, businesses closed down and unemployment peaked. There were many reasons that were put forth by various economists. A report presented in the US senate called it as the “failure of regulators, credit agencies and markets”.

Citigroup’s Sufferings
According to a US government’s report which came into the light in 2011, Citigroup which was the third largest US bank in terms of assets at that time was on the verge of failure. Regulators were going to pull the plugs on it anytime as depositors were withdrawing their deposits and bank’s counterparties also declined to give credits to the bank.

How Citigroup moved to new setup?
Citigroup suffered losses for five consecutive quarters. In the fifth quarter, in fact its losses were to the tune of $ 8.29 billion. Many in the Citigroup agreed to the fact that unless something is done to sharpen its strategy, Citigroup will never regain its glory and perform accordingly. As a result, Citigroup started analyzing its business and strategies. It was found that Citigroup was involved in too many business segments which stopped it from focusing on its core interest area. While analyzing, everything big or small was examined. Citigroup in its annual report called the analysis as “wide ranging and dispassionate”. The outcome of this analysis was that the Citigroup finally decided to realign the group’s various...
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