Company Overview

With a presence in more than 120 countries, over two million customer accounts, 3,000 bank branches, and more than $1 trillion in assets, Citigroup is a financial services titan. Yet the extraordinary upheavals in the global economy in 2008 and 2009 showed that even the biggest titans are vulnerable. After Citigroup took a major hit on holdings tied to U.S. subprime mortgages, the U.S. government, in an unprecedented move, took a 36 percent stake in the bank.

The move is intended to prevent Citi’s failure, which would likely spur catastrophic effects throughout the U.S financial system. Vikram Pandit, who became CEO in 2007, will remain in his position, but the company will have to add more independent members to its board. Citigroup hopes government backing will restore consumer confidence and allow the company to weather the worst financial crisis since the depression.

Citigroup, Inc., known simply as Citi to many, was born in 1998 when all corporate divisions of Citicorp and Travelers Group merged. The conglomerate, orchestrated by Sanford Weill, blurred the lines between banking and insurance. But this combination was not as successful as planned, and in 2002 the company sold Travelers Insurance.

In 2003, Weill retired as CEO and was replaced by Charles Prince. Prince dreamed of rapidly expanding Citi’s reach, and directed the company into mortgage-backed securities. With the decline of the housing market and a lending crisis on the horizon, however, this expansion proved dangerous. In 2007, along with an announcement that it would write down almost $11 billion related to subprime mortgages, Citi announced Prince would resign as CEO.

Citi continued to struggle throughout 2008. The company reorganized into four major business groups—Consumer Banking, Institutional Clients Group, Global Cards, and Global Wealth Management—and announced it would try and cut around $15 billion in operating costs by selling troubled assets and reducing its workforce. The year saw two government bailouts, layoffs of about 50,000 employees, and losses that reached $90 billion. With losses and government pressure mounting, Citi plans to restructure again in 2009. In order to streamline operations and focus on profitable ventures, the company will split into two factions: Citicorp will continue global consumer and business-related banking; Citi Holdings will control brokerage and retail assets and consumer financing.

After the government performed a stress test on 19 of the biggest U.S. banks, the Federal Reserve recommended Citigroup raise at least $5 billion in capital. Despite Citi’s bad fortune in the credit crunch, it remains one of the largest financial firms in the world, with many subsidiaries and expectations for future growth. It remains to be seen whether further involvement from the federal government will be necessary and when Citi might be able to return to business as usual.