Citigroup

Case Study Citigroup

* Problem Statement:

In 1998, the Travelers Group and Citicorp merged to create Citigroup Inc., considered the first true global "financial supermarket," and a business model to be envied, feared and emulated. By year-end 2006 the firm had a market capitalization of $274 billion, with $1.9 trillion in assets and $24.6 billion in earnings. But ten years after the merger it ended in badly. In July of 2009, the firm was effectively nationalized, with billions of dollars in bailout money converted into a 34% ownership stake for the U.S. government. Citigroup was worth less than $16 billion, having lost more than $250 billion in value from its peak.

* Supporting Facts:

Prior to the financial crisis, in December 2006, Citigroup shares reached an all-time high level of $57. By March 5, 2009, Citi shares fell below $1, trading as low as $0.97.

* SWOT Analysis

Strengths:

1) The world's largest credit card issuer

2) Diversified financial products (consumer finance, retail banking products and services, 
 investment banking, commercial banking, asset management, trade finance, e-commerce
 products and services, private banking)

3) Global infrastructure

Weaknesses:

1) Exposure to subprime mortgage market

2) Debt obligations related to asset backed securities and subprime market

Opportunities:

1) Extensive range of services enhances the group's cross-selling opportunities to weather financial market turmoil

2) Online, mobile banking

3) Emerging markets

4) Acquisition/integration of Automated Trading Desk

Threats:

1) World’s largest credit card issuer - huge liability

2) Weakening financial markets

3) Consolidation in the banking industry - bigger, larger competitors

4) Weak mortgage market in the US

Cyber targeting

* Alternative Solutions Conclusion Recommendation:

With the mortgage crisis in 2008 it hurt all the banks in the US. It could...