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Is Citibank A Good Bank?

Is Citibank A Good Bank?

Business

Better than most recently, thats for sure! But, of course focus on the FDIC $250,000 insurance. Just don’t leave too many eggs in one basket.

Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity. 

These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy. 

Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount). 

Clearly Citi’s risk exposure remains quite impressive. Look at the above losses vs piers. Moreover, after one of the worst bond slumps in history!

Looks like the odds are ever in Citi’s favor these days.

Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some are worried Will Bank of America Collapse? And many others worry whether or not Will Wells Fargo Fail? And of course, many others are worried about whether the more local establishments can keep breathing. Will First Republic Bank Fail? Or is my money Safe in Schwab?

But, let’s take a look at the history of ‘the house that Sandy built’!

Citigroup, Inc. is a global financial services corporation that offers a wide range of financial products and services, including consumer banking, corporate and investment banking, securities brokerage, wealth management, and insurance. The company was formed in 1998 through the merger of Citicorp and Travelers Group, creating one of the largest financial services conglomerates in the world. Here’s a brief history of Citigroup:

Founded in 1812 as the City Bank of New York. It became the first bank in the U.S. to issue debit cards and automated teller machines (ATMs) in the 1970s.

Travelers Group was founded in 1864 as St. Paul Fire and Marine Insurance Co. In 1993, Sanford Weill merged his firm, Commercial Credit, with Travelers to form Travelers Group.

In 1998, Citicorp and Travelers Group merged to form Citigroup, Inc. The merger was controversial and required the repeal of the Glass-Steagall Act, a Depression-era law that separated commercial banking from investment banking.

In the early 2000s, Citigroup experienced significant growth and expansion. It acquired Salomon Smith Barney, a major investment bank, in 1998. And later merged it with its own investment banking unit to form Citigroup Global Markets.

Citigroup also expanded globally during this time, acquiring major banks in Europe and Asia. Furthermore, establishing a strong presence in emerging markets.

However, Citigroup also faced significant challenges in the 2000s. Hit hard by the subprime mortgage crisis in 2007-2008 and had to receive a bailout from the U.S. government to avoid collapse.

After the financial crisis, Citigroup underwent a major restructuring and divested many of its non-core businesses. It also faced regulatory scrutiny and became fined for violating various laws and regulations.

In conclusion, in recent years, Citigroup has focused on improving its financial performance and strengthening its risk management practices. In 2020, it appointed Jane Fraser as its CEO, making her the first woman to lead a major Wall Street bank.

Today, Citigroup is one of the largest financial institutions in the world, with operations in more than 100 countries and over 200 million customers.

Is Citibank A Good Bank?