Citigroup’s Wall Street operations took the bank to the brink seven years ago. But now, in a little-noticed revival, Citigroup’s traders and investment bankers have come roaring back.
The bank’s resurgence on Wall Street is all the more remarkable because it is taking place as many of its rivals pull back in the face of new regulations intended to make the financial system safer. The Wall Street operations of JPMorgan Chase and Goldman Sachs, for instance, have remained steady or shrunk during the last four years.
Citigroup’s advance has involved acquiring vast amounts of derivatives, the financial instruments that gained notoriety during the 2008 financial crisis. It has at times snapped up derivatives from other banks that have been selling them to comply with new rules.
Citigroup has not trumpeted its comeback. Its most senior executives have largely emphasized streamlining operations that have little to do with Wall Street. For instance, the bank announced this month that it had agreed to sell a large unit that focuses on subprime loans to consumers.
“Citi is much simpler, smaller, safer and stronger than it was before the crisis,” Danielle Romero-Apsilos, a spokeswoman for Citigroup, said in a statement. “We have been growing selected businesses in a careful and responsible manner, consistent with regulatory requirements and market environment. Our improved position in the industry is a consequence of earning a greater share of our clients’ business.”
Citigroup’s investment bank is also no longer involved in the toxic activities that were most dangerous to the bank’s health. The bank also has substantially higher levels of capital, the financial buffer that reflects a bank’s ability to absorb losses.
Source: nytimes.com
