Citigroup Employees: From Financial Crisis to Return on Investment

Citigroup employees have been through a lot, especially during the financial crisis. In 2008, the company's stock price plummeted by 75% due to massive write-downs of its subprime mortgage assets.

Many employees were left wondering about the future of the company. But, under the leadership of Vikram Pandit, Citigroup began to recover. By 2011, the company had paid back its $45 billion bailout.

The financial crisis was a tough time for everyone involved. But, Citigroup employees played a crucial role in helping the company get back on its feet.

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As Citigroup's history began to take shape, the company's roots can be traced back to 1812, when the City Bank of New York was founded.

This early bank would eventually become the nucleus of Citibank, one of the world's largest banks.

In 1863, the bank was renamed the National City Bank of New York, and by 1895, it had expanded globally, opening its first foreign branch in Shanghai, China.

The bank continued to grow and evolve, eventually becoming a major player in the financial industry.

Citigroup's formation in 1998 marked a significant milestone, but it's interesting to note that the company's foundation was laid many years earlier.

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Citigroup employees faced a massive job cull in 2008, with around 52,000 new job cuts announced on November 17, 2008, on top of 23,000 cuts already made that year.

The bank's struggles led to a huge job reduction, with staff cuts ultimately totaling over 100,000 employees.

By November 2008, Citigroup was insolvent, despite receiving $25 billion in taxpayer-funded federal Troubled Asset Relief Program funds.

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The Subprime Mortgage Crisis was a major contributor to the Financial Crisis of 2007-2008.

The crisis began with the widespread issuance of subprime mortgages, which were given to borrowers with poor credit history.

These mortgages had low introductory interest rates that would later adjust to much higher rates, making monthly payments unaffordable for many borrowers.

Many of these borrowers were not able to afford the homes they were buying, and the market was flooded with foreclosed properties.

The housing market bubble burst in 2006, causing housing prices to plummet and leaving many homeowners with mortgages that were worth more than their homes.

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As a result, many banks and other financial institutions found themselves holding large amounts of worthless mortgages, leading to a massive credit crisis.

The crisis led to widespread job losses, business failures, and a sharp decline in economic output.

The US government responded with a series of bailouts and stimulus packages, but the crisis had already caused significant damage to the global economy.

In November 2008, Citigroup was on the verge of collapse, with a market capitalization of just $6 billion, down from $300 billion two years prior.

By July 2008, Citigroup was struggling and by November they were insolvent, despite receiving $25 billion in taxpayer-funded federal Troubled Asset Relief Program funds.

The company's stock market value dropped to $20.5 billion, down from $244 billion two years earlier, with shares trading well below $1.00 on the New York Stock Exchange.

Citigroup's massive job cull resulted in over 100,000 employees being let go, with the company announcing plans for an additional 52,000 job cuts in November 2008.

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The US government intervened with a massive bailout for Citigroup, designed to rescue the company from bankruptcy and give the government a major say in its operations.

The bailout called for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company, with the Treasury providing $20 billion in Troubled Asset Relief Program funds.

The government obtained wide powers over banking operations, including the ability to modify mortgages and cap executive salaries, as a condition of the federal assistance.

Citigroup agreed to give the US Treasury $27 billion of preferred shares and warrants to acquire common stock, with the government assuming 90% of the losses on Citigroup's $335 billion portfolio.

The government's majority holding of Citigroup's common stock led to restrictions on compensation and bonuses, which were limited from February 2009 until December 2010.

Citigroup paid hundreds of millions of dollars in bonuses to over 1,038 of its employees after receiving its $45 billion TARP funds, including 738 employees each receiving $1 million in bonuses.

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Citigroup employees have been at the forefront of innovation, with the company launching a new digital banking platform in 2020. This platform has been a game-changer for customers, offering a seamless and secure online banking experience.

The platform has been a huge success, with over 10 million customers using it within the first year of its launch. This is a testament to the hard work and dedication of Citigroup employees who have been working tirelessly to develop and implement this technology.

Citigroup has also been making significant investments in employee development, with a focus on upskilling and reskilling programs. This is aimed at helping employees stay relevant in a rapidly changing industry and to prepare them for future roles within the company.

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In 1998, Citicorp and Travelers announced a merger that would allow them to access each other's customer base for marketing financial products.

The merger deal was finalized in 1998 and enabled Travelers Group to acquire all Citicorp shares.

Existing shareholders of each company owned about half of the new firm, which was named Citigroup, Inc.

The new company maintained Citicorp's "Citi" brand in its name but adopted Travelers' distinctive "red umbrella" as its corporate logo.

The chairmen of both parent companies, John S. Reed and Sandy Weill, became co-chairmen and co-CEOs of the new company.

However, their vastly different management styles raised questions about the wisdom of this setup.

The merger was a significant move, as it allowed Citigroup to offer a mix of commercial banking, investment banking, insurance underwriting, and brokerage services.

This was made possible by the passing of the Gramm-Leach-Bliley Act in November 1999, which repealed parts of the Glass-Steagall Act that had previously prohibited such combinations.

Joe J. Plumeri played a key role in the post-merger integration of Citicorp and Travelers, and he was appointed CEO of Citibank North America.

Under his leadership, Citibank's earnings increased from $108 million to $415 million in just one year, a nearly 300% boost.

Plumeri's unexpected retirement from Citibank in January 2000 was a surprise to many in the industry.

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Smith Barney was a global private wealth management unit of Citi, with over 800 offices worldwide.

In 2009, Citi announced the merger of Smith Barney with Morgan Stanley Wealth Management, receiving $2.7 billion and a 49% interest in the joint venture.

Smith Barney held 9.6 million domestic client accounts, representing $1.562 trillion in client assets worldwide.

Citi sold its remaining 49% stake in Smith Barney to Morgan Stanley Wealth Management for $13.5 billion in 2013.

The sale followed an appraisal by Perella Weinberg.

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In 2010, Citigroup achieved its first profitable year since 2007, reporting $10.6 billion in net profit.

This marked a significant turnaround from the $1.6 billion loss the company reported in 2009.

The government's remaining stock holding in Citigroup was sold late in 2010, yielding an overall net profit to taxpayers of $12 billion, which would be approximately $16.4 billion in 2023.

A special IRS tax exception allowed the US Treasury to sell its shares at a profit, netting $12 billion.

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In 2012, Citigroup formed a joint venture with Orient Securities to create Citi Orient Securities, a Shanghai-based equity and debt brokerage operating in the Chinese market.

This joint venture was a significant move for Citigroup, marking its entry into the Chinese investment banking market.

Citi Orient Securities focused on providing equity and debt brokerage services to clients in China.

The joint venture was a collaborative effort between Citigroup's Global Markets division and Orient Securities.

In January 2019, Citigroup announced that it had sold its stake in the business to its Chinese partner.

This move marked the end of Citigroup's involvement in the joint venture, but it had already made a lasting impact on the company's presence in China.

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