Comments on: Give Corbat some time http://blogs.reuters.com/felix-salmon/2012/10/17/give-corbat-some-time/ A slice of lime in the soda Fri, 24 May 2013 18:36:44 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: NotoriousBOB http://blogs.reuters.com/felix-salmon/2012/10/17/give-corbat-some-time/comment-page-1/#comment-43978 NotoriousBOB Wed, 17 Oct 2012 21:06:56 +0000 https://blogs.reuters.com/felix-salmon/?p=19019#comment-43978 Very insightful post....I was a MD in the "old" Citi's Global Relationship Bank on the product side (Structured Products Division)...the pre-Sandy John Reed perspective on the whole GRB was very negative....compared to the Consumer Bank....the commercial bank was always viewed as event risk just waiting to happen by Reed... He didn't get rid of it it was thought because of the need for the Consumer Bank especially in the emerging markets to project the aura of bigness and globality...("heavy stone")...which at the end of the day they did not think they could do if they weren't banking, say, IBM globally...even if at a loss... The problem was that plain vanilla commercial banking for the Fortune 1000 was a loser in ROE terms, especially when compared to the opportunities to deploy capital in the Consumer Bank....the strategic discpline imposed was to manage a relationship for return....so that awful products like standby revolvers required by the client were offset with..."structured" products or fee businesses....both very like an IB relationship....derivatives were important as were executing capital markets transactions... So I would say that Corbat will have a tough time making the commercial bank work without some IB offerings. Your comments about the managwement issues are spot on.... Very insightful post….I was a MD in the “old” Citi’s Global Relationship Bank on the product side (Structured Products Division)…the pre-Sandy John Reed perspective on the whole GRB was very negative….compared to the Consumer Bank….the commercial bank was always viewed as event risk just waiting to happen by Reed…

He didn’t get rid of it it was thought because of the need for the Consumer Bank especially in the emerging markets to project the aura of bigness and globality…(“heavy stone”)…which at the end of the day they did not think they could do if they weren’t banking, say, IBM globally…even if at a loss…

The problem was that plain vanilla commercial banking for the Fortune 1000 was a loser in ROE terms, especially when compared to the opportunities to deploy capital in the Consumer Bank….the strategic discpline imposed was to manage a relationship for return….so that awful products like standby revolvers required by the client were offset with…”structured” products or fee businesses….both very like an IB relationship….derivatives were important as were executing capital markets transactions…

So I would say that Corbat will have a tough time making the commercial bank work without some IB offerings.

Your comments about the managwement issues are spot on….

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