Magazine article American Banker

Citi: Global Group Revamp Meant to Boost Business

Magazine article American Banker

Citi: Global Group Revamp Meant to Boost Business

Article excerpt

At his first major public presentation as Citigroup Inc.'s chief executive in November, Charles O. Prince made it clear he would not settle for second place.

At the New York presentation, Mr. Prince highlighted improvements he expected from Citi's global corporate and investment banking group, which he had personally guided through 2002's regulatory minefield.

Citi's goal, "unqualified, is to be No. 1 in every product category in which we choose to compete," he said at the time. "No. 2 in M&A is not good enough. No. 3 in equities is not good enough."

On Tuesday the company unveiled a major restructuring of the group, now organized under three business lines, and a shuffling of a number of executives.

And even though Robert Druskin, the group's president and CEO, said the moves were neither a "restructuring of something that is broken" nor a demotion for anyone involved, some analysts were not convinced.

"Citigroup is slipping a bit in market position in investment banking, and where it retains its No. 1 position, it's slipping in market share," Richard X. Bove, an analyst with Hoefer & Arnett Inc., said in an interview Wednesday.

The restructuring is a direct result of that performance, he said.

Citi led the industry in bond issuance last year, with $501.2 billion of deals, according to data from Thomson Financial. Yet it fell from the top spot in U.S. stock underwriting to No. 3, behind Goldman Sachs Group Inc. and Morgan Stanley, and Citi's share of those deals dropped by 4.3 percentage points, to 12.6%. Globally, it was No. 2 last year in stock underwriting, behind Goldman.

"Guys like Morgan Stanley have given them a drubbing of late," Mr. Bove said. "If Prince is true to his word, he's not going to tolerate that. He's going to make changes, and I think that's what he did. …

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