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Citigroup (C) Mulls Corporate Overhaul, to Split ICG Division
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Per Financial Times article, Jane Fraser, CEO of Citigroup Inc. (C - Free Report) , is planning to alter corporate structure by splitting its biggest division Institutional Clients Group (ICG). The division, which generated nearly 75% of total net income in 2022, will be divided into three business segments - Investment and Corporate Banking, Global Markets and Transaction Services – per persons familiar with the matter.
Since 2013, C operates through two divisions, namely, ICG, and Personal Banking and Wealth Management. The latter includes the company’s retail bank, credit cards and wealth management.
As announced earlier, Citigroup’s wealth management unit would be separated from the rest of the consumer bank operations. Hence, post ICG’s break-up, the bank would have a total of five divisions, three commercial business units and two consumer divisions.
This proposal seems to have been floated post the announcement of ICG division head Paco Ybarra’s leave. He is expected to leave by mid-2024 and the company has neither announced his replacement nor it is actively in search for one.
Once the proposed plan is fulfilled, these separate divisions would be run by their current heads and would report directly to Fraser.
We believe such a plan for business divisions would be beneficial for Citigroup as it would lead to better accountability, greater control and synchronization of operations as well as specialization in the activities performed.
Moreover, Citigroup is already in the middle of a major business streamlining process. In April 2021, it announced a significant strategic action to exit the consumer banking business in 13 markets. In January 2022, the company revealed plans to exit certain banking operations in Mexico.
Earlier this month, it completed the sale and migration of its Taiwan consumer business to DBS. Also, it has signed deals to divest consumer businesses in nine markets and completed sales in eight markets.
Citigroup’s shares have lost 15.6% over the past six months compared with the industry’s decline of 10.1%.
Last month, Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) and Morgan Stanley (MS - Free Report) announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures.
The partnership, originating from MUFG's $9 billion investment in Morgan Stanley during the 2008 financial crisis, will see combined Japanese equity research, sales and execution services for institutional clients at Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.
Additionally, their equity underwriting business will be rearranged between the two brokerage units. The implementation of this expanded alliance is scheduled for the first half of 2024.
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Citigroup (C) Mulls Corporate Overhaul, to Split ICG Division
Per Financial Times article, Jane Fraser, CEO of Citigroup Inc. (C - Free Report) , is planning to alter corporate structure by splitting its biggest division Institutional Clients Group (ICG). The division, which generated nearly 75% of total net income in 2022, will be divided into three business segments - Investment and Corporate Banking, Global Markets and Transaction Services – per persons familiar with the matter.
Since 2013, C operates through two divisions, namely, ICG, and Personal Banking and Wealth Management. The latter includes the company’s retail bank, credit cards and wealth management.
As announced earlier, Citigroup’s wealth management unit would be separated from the rest of the consumer bank operations. Hence, post ICG’s break-up, the bank would have a total of five divisions, three commercial business units and two consumer divisions.
This proposal seems to have been floated post the announcement of ICG division head Paco Ybarra’s leave. He is expected to leave by mid-2024 and the company has neither announced his replacement nor it is actively in search for one.
Once the proposed plan is fulfilled, these separate divisions would be run by their current heads and would report directly to Fraser.
We believe such a plan for business divisions would be beneficial for Citigroup as it would lead to better accountability, greater control and synchronization of operations as well as specialization in the activities performed.
Moreover, Citigroup is already in the middle of a major business streamlining process. In April 2021, it announced a significant strategic action to exit the consumer banking business in 13 markets. In January 2022, the company revealed plans to exit certain banking operations in Mexico.
Earlier this month, it completed the sale and migration of its Taiwan consumer business to DBS. Also, it has signed deals to divest consumer businesses in nine markets and completed sales in eight markets.
Citigroup’s shares have lost 15.6% over the past six months compared with the industry’s decline of 10.1%.
Image Source: Zacks Investment Research
C presently carries a Zacks Rank #3 (Hold). You cansee the complete list of today’s Zacks #1 Rank stocks here.
Last month, Mitsubishi UFJ Financial Group, Inc. (MUFG - Free Report) and Morgan Stanley (MS - Free Report) announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures.
The partnership, originating from MUFG's $9 billion investment in Morgan Stanley during the 2008 financial crisis, will see combined Japanese equity research, sales and execution services for institutional clients at Mitsubishi UFJ Morgan Stanley Securities and Morgan Stanley MUFG Securities.
Additionally, their equity underwriting business will be rearranged between the two brokerage units. The implementation of this expanded alliance is scheduled for the first half of 2024.