Citicorp: Not very American

By Felix Salmon
July 17, 2009

Beyond a vague notion that Citicorp is the “good bank” and Citi Holdings is the “bad bank”, I’ve been a little unclear on exactly where Citi is going with this cleavage. But today’s quarterly report is helpful in that it gives not only the Q2 2009 numbers for Citicorp, but also the Q2 2008 numbers. That helps us see how the good bank is structured, especially as regards its geographical balance. And the result might be surprising: North America is much less important to Citicorp than you might think.

Citicorp shares its revenues between two big buckets: “Regional Consumer Banking” (retail banking) and “Institutional Clients Group” (wholesale banking). On the retail side, North America accounts for 31% of the revenues and none of the profits; Latin America, by contrast, is 32% of the revenues and 32% of the profits, while Asia accounts for 29% of the revenues and a whopping 125% of the profits. The small EMEA group is troubled: it had revenues of just $394 million in the quarter, but still contrived to lose $110 million.

On the wholesale side, there’s another pair of buckets: “Securities and Banking”, which is self-explanatory, and “Transaction Services”, which is the boring (but extremely profitable) back-office stuff. On the banking side, Asia once again is punching well above its weight, with 20% of the revenues but 32% of the profits. North America had 28% of the revenues, but didn’t manage to make any money.

If you add all the line items together, North America had 29% of Citicorp’s revenues, and 5.5% of its profits.

I’m all in favor of geographical diversification, but this looks almost as though Citi is giving up on the US. JP Morgan and Goldman Sachs have shown that there are billions of dollars to be made in this country, but North American profits at Citicorp totaled just $169 million, of which $181 million came from Transaction Services.

When Citi lost Wachovia to Wells Fargo, that was pretty much the end, I think, of its ambition to be a major consumer bank in the US. There are three big retail banks in America now: Bank of America, Chase, and Wells Fargo. Citibank, while enormous globally, is a distant fourth domestically. And it seems as though Citigroup is positioning Citicorp similarly. That’s in line with Citicorp’s heritage: Citi was always concentrated overseas before it was bought by Sandy Weill. And the departing CEO of Citibank NA, Bill Rhodes, is the epitome of globe-trotting Davos Man: it’s not easy to imagine him talking about branch strategy in west Texas. And in general you’re much more likely to find a Citibank in some dusty foreign capital than you are in any US flyover state.

Citigroup is based in the US, of course, and the US government is its largest shareholder. But if its plan to divest itself of Citi Holdings ever happens, the remaining company won’t be particularly American.


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that’s not real work but coming from increase the interset of cridet card

Posted by victor khalil | Report as abusive

Looking at a statement for this kind of information can be misleading. Gains or losses may be booked in different regions for a number of reasons; they don’t necessarily indicate that the gains or losses originated in that region.

Good article Felix, I like your approach.

Observing the numbers, we can see that the global conglomeration of the banking system has had a communisation of banking ‘key customers’ in a global sense. It is becoming a more profound fact that our banking sector has enormous political influence over the US Government and less and less interest in the actual functional mechanism of the economic welfare of the general population of Americans.

Your analysis of the numbers is begining to reflect this trend and confirms to many American’s that our banks are not necessarilly invested in the future of the American People.

We must thereby start to level headedly ask the question of how much influence they should continue to have over our form of government.

A good customer is a good customer and in banking a dollar is a dollar or a yen or a yaun a euro a ruble or swiss franc. We need to take a more skeptic eye on banking conglomerations customer and revenue bases and determine how much ‘access’ that natural influence should be granted within our legislative body.

Your article identifies a problem that needs to be handled in a deliberate fashion in curtailing the influence of the large banking sector over US Public Policy.

In my opinion.

Don’t shoot the messenger, life is hard enough right now.

One has to ask the question, these banks are multinational institutions why is it when the crap hits the fan the US tax payer is always the one holding the bag. In this case 2.2 trillion dollars (So far) worth of subprime/CDS shat. Am I to believe that no “foreign” investors were involved in any of these “Exotic Finantial timebombs” Wasnt the majority of AIG;s issues caused by one office in London? Well we bailed all these institutions out no questions asked and will be paying interest on these “Fed” (Private corrupt oligarchies) loans until the cows come home. Aint America great!! Heads we win Tails we win oh my the coin is standing on its edge we win. All I can say is huh? The main stream media now has Michael Jackson’s death to cover so lets just keep our focus on the frivolity. No need to hurt our pretty heads thinking about how badly we have been screwed.

Posted by Rich | Report as abusive

I hate to use the word ‘sharecroppers’ to describe the reality American’s face with their inflated mortgage principal and that the mortgage holders are ultimately ‘not Americans’ but this is the situation the lack of financial regulation during the dropping of glass stegal and the lassaiz faire legal system of the ‘new’ Bush System developed for the US.

A poorly managed system that unregulated has gone on to treat US Entrepreneurism like Terrorists and has converted home ownership by mortgage into a form of economic slavery. While allowing MADOFFS to operate with some form of oligarchic pay-to-play modern economic schemes that fail to differentiate financial competition from criminal behaviors.

This past decade has provided a full spectrum of data for economists, criminoligists, political analysts and independent Americans to measure by question of who’s interests are being served within our fiancial sector?

Certainly the global economy has made the entire financial sector less American by its very nature but as the Financial system demands more concessions from Americans, we must begin to ask at what point does it stop operating in an American Fashion and should be regulated where it intersects with Constitutional Rights of Property and Fair Play of American People.

We are not communists and or regulation of the finance industry as it operates within an American Context of our sovereign rights should recognize more readily that Banks are not necessarily American entities just because they trade their shares on the American Exchanges.

Facts are facts and you have provided some valueable facts about Citi for all Americans to focus more thought on the future of our Financial Regulatory System where it interesects with US Citizens Rights.

wouldn’t it be surprising to learn this year that the only way Goldman Sachs can repeat their equities program trading performance to pay those enormous bonuses is to go short?

Then we would truly need to ask, are these banks too big?

Was the Systemic Failure telling us that our Banks are Too Big and allowing the failure would have broken them up and assured American’s Financial Freedom and Prosperous Way of life that worked for 70 years before the fall of Glass Stegal?

It is more than an academic argument when you see what is happening in Michigan where next year 1 in 4 to 5 US Citizens living in Michigan will be unemployed directly attributable to the banking crisis.

Too Big?

Would legislative breaking up the Big Banks create a major increase in employment and reduce future systemic risks?

Invariably the answer is yes.

But sure as hell no one wants to ask the question!

Federal Reserve isnt American either, what with the Rothschild Banking Family being the primary private shareholder. How many of you know that the Fed is a privately run, for profit, pseudo governmental banking institution? Banks ran this country and have for decades. This whole collapse is just a facade. And by the way, we are already in for over 14 trillion, not 2.2. The reason why the American taxpayer is left holding the bag is because we are the most well armed population on Earth. Therefore we are the most significant threat the globalist agenda. so they must wreck our economy to weaken our resolve, then when things get out of hand they will impliment martial law and consfiscate our weapons.

Felix obviously doesn’t know his way around a balance sheet to be formulating these opinions.

Posted by scott | Report as abusive

This has been Citi’s plan all along. Here’s a comment from Inca Kola News on March 1st:

“What you’re saying is that Citi has a $15 billion asset that it doesn’t want to sell. But if Citi was seized, someone would pay $15 billion or so for Banamex.

There’s been a lot of talk about holding companies, but I wonder if the US taxpayer knows that Citi could raise $15 billion on its own.

What you describe is an attempt to allow Citi to keep Banamex, which is where the profit really is. In other words, we’re funding Citi so that it can keep Banamex. Am I wrong?”

“Otto Rock said…

That’s kind of right, Don.

Perhaps the more pressing issue is that Pandit&Co realize the enormous difference between a $15Bn asset and $15Bn in cash right now. If Banamex were sold, the money raised would have to be thrown down the bottomless pit and lost forver. However the assets (if C can hang onto them) will make C worth something in Pandit’s Utopian future.”

And here:

“SINGAPORE, March 13 (Reuters) – Citigroup (C.N: Quote, Profile, Research) said on Friday it plans to start equity brokerage businesses in Malaysia, Vietnam and Indonesia this year, and is seeking more branches in Thailand in a bid to expand its business in Southeast Asia.

The moves are a sign that the U.S. bank, which has been hit by massive losses in the United States due to the collapse of the housing market, is betting on Asia to boost its international business.

“Our current focus is to invest all across the region,” Piyush Gupta, who heads Southeast Asia and the Pacific region for Citigroup, told Reuters in an interview. ”

And here:

“By Andres R. Martinez

Feb. 20 (Bloomberg) — Citigroup Inc. Chief Executive Officer Vikram Pandit said the bank is committed to its Mexican unit, Grupo Financiero Banamex SA.

“I want to make it very clear: Citi and Banamex are one and the same,” Pandit said at a Banamex conference in Mexico City today, according to a company statement. “The future of Citi is in emerging markets. It’s in Latin America. It’s in Mexico with Banamex.”

Pandit has been pretty clear that Citi’s future was not in the US. But, remember, we’re shareholders now.

“Too Big To Fail” Hmm I wonder? Who decides who is too big? Henry Paulson? Timmy Boy Geitner? What precise metric is used to make this decision? Campaign contributions who knows? Why cant we audit the Fed? Why is a organization of private capitalist banks been given the ability to create vast fortunes of money from thin air? A group also given the priveledge of collecting interest on said majic thin air. “The bigger they are the harder they fall” I say. We have now seen a further distilation of the turds floating in the cesspool that makes up the international banking industry. Distilled into a small number of frightening large Super Banks. Super is an oxymoron in this context. I started out with United Jersey bank (1996) which was bought by Summit Bank (1998) which was bought by Fleet Bank (1999) which was bought by Bank Of America (2000ish) Now its Merrill/plus/BOA. The same Uber banks that need absurdly huge injections of borrowed tax payer dollars as they teeter under the weight of their own fecal intestinal mass. I thought we lived in a democracy, a capitalist democracy on top of that! If your business tanks you fail no matter how big no matter how dysfunctional no matter how corrupt,you tank, you get flushed them’s the rules. Wouldnt we help seperate the chaff from the whey if we cut these financial idiots down to size? Split them up like loosers cash at the end of a drunken poker night. We own much of them right now. Arent we entitled to a hansome profit on our “emergency” invetment of 9-10 trillion dollars? Goldman Sachs has profited hansomly with our aid why is it we are not allowed this luxury in a time of need? I know I need some new shoes and my car is a POS. The bigger they are the harder they fall.

Posted by Government Sachs | Report as abusive

To the point of Citi being an international bank, I must say, during a recent trip to Guatemala I was amazed to see what seemed to be more branches in Guatemala City than in Washington, D.C.

Posted by Stuart | Report as abusive

So, at about $3.00 is C a buy? I need to make some money on market to balance horrendous losses!

Posted by Charles | Report as abusive

Citi corp get out of the U.S. and go to the countries where you can make money and pay back the small investors! It’s the same story, money talks. The big boys over the weeekend sure cut themselves a deal. Double diget interest and 3 to 1 on secured assets. I have 50k invested aqnd get s—t. The person in the White house who won’t even prove that he is a native born American citizen and is NOT my president untill he proves so, refused any aid to Citi Corp, but is going to shove gov med care up ourws. People in America are just plain STUPID they are letting our country go to hell, and don’t give a damm.

double diget