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  • Citigroup is in trouble.


  • After the company's collapse during the 2008 recession, Citi stock has continuously struggled.

    在 2008 年的經濟衰退後,花旗的股票持續走低。

  • Shares of the company saw more than a 30% drop over the last five years.

    在過去五年中,該公司的股票下跌超過 30%。

  • The firm has faced many ups and downs over the course of my career here, and it's clear we have challenges that we need to urgently address right now.


  • Citigroup has had worst in class efficiency, returns and stock market valuation, and that's led to underperformance over almost any timeframe.


  • They haven't been profitable enough.


  • It's a chronic laggard in profitability.


  • It's not that it's teetering on the edge.


  • Once the largest bank in America, Citigroup is now the third biggest in the U.S., with over $1.7 trillion in consolidated assets.

    曾經是美國最大的銀行,如今花旗集團在美國排名第三,其合併資產超過 1.7 兆美元。

  • Globally, it is the 11th largest, with just over $2.4 trillion in total assets.

    全球排名第十一位,總資產僅稍超過 2.4 兆美元。

  • Citigroup, I believe, is finally turning a page.


  • The first step to improve is to recognize that you have a problem in the first place.


  • We know there is a clear cut case for change at Citi.


  • I hope you've seen we're acting on it, positioning our firm's long term future and tackling the issues that have held us back head on.


  • The challenge now will be executing and changing that culture to what she wants to be more real time and more aware and more intense and more about winning.


  • So what kind of changes is Citi making, and can it return to its former glory?


  • In April 2021, Jane Fraser, the CEO of Citigroup, announced a bold shift in the company's strategy, exiting 13 retail markets outside of the United States.

    在2021年4月,花旗集團的執行長珍·弗雷澤宣布了一項大膽的轉變策略,決定退出美國以外的 13 個零售市場。

  • Asia and the EMEA region accounted for more than a third of Citi's net revenue in the year prior.


  • This global vision that Citi retail banking was an aspirational bank, that it was kind of like the Nike swoosh or the Mercedes star, that it was a branded global good.

    花旗集團零售銀行的全球願景是,它是一家具有抱負的銀行,就像 Nike 的勾勾標誌或賓士的三芒星一樣,是一個具有品牌價值的全球資產。

  • And every CEO had that vision.

    每位 CEO 都有這樣的願景。

  • And maybe in the '60s it was true.

    也許在 1960 年代是這樣。

  • Under Jane Fraser, Citi is finally unwinding the failed 50-year experiment of serving consumers all around the world.

    在珍·弗雷澤的領導下,花旗集團終於開始解除那個長達 50 年為全球消費者提供服務的失敗實驗。

  • The old banking adage has played out.


  • Wholesale banking is global, retail banking is local.


  • In 2022 alone, Citigroup completed sales of its business in five countries and added Mexico to the list of countries it's departing.

    僅在 2022 年,花旗集團就完成了在五個國家的業務出售,並將墨西哥列入了其退出名單之中。

  • What's been obvious to analysts for a long time is that Citi had become too unwieldy, too big to manage, and that ultimately a lot of the disparate parts overseas.


  • They didn't really have very many synergies between them.


  • Four executives I spoke to actually referred to these businesses as melting ice cubes.


  • In other words, that over time with disinvestment, with perhaps not the greatest management focus from HQ,


  • that ultimately their value was decreasing versus some of the sharper, more motivated, locally owned competitors in many of these overseas markets.


  • Citi instead announced its plans to divert its resources and focus to double down on wealth management.


  • It's a tactical move that several other major banks have adopted in recent years.


  • I always like to say banking is all about money. And guess who's got money?


  • Rich people got money.


  • Everybody wants to bank affluent people.


  • You have a financial adviser usually getting paid on an annual basis of 1% to 2% of the assets under management.

    財務顧問通常按照管理之資產的 1% 到 2% 進行年度收費。

  • And to that very basic model, you could add fees for margin loans or jumbo mortgages and things like that.


  • But the reason why Wall Street and investors tend to love this business is that it gives off an annuity-like stream of earnings, no matter what's going on in the merger markets, what's going on in trading.


  • It offers high returns.


  • It creates growth opportunities in areas that are in the early stages of wealth generation like Asia and the Middle East, and it comes with less risk of big mishaps.


  • So the regulatory treatment is better.


  • But at its core, Citi's new strategy is all about simplifying down their business.


  • Part of the idea is that if you shrink down the footprint, and you're not doing so many things in so many different jurisdictions,


  • that not only will you have better critical mass in the markets that you do choose to serve, you'll also get less capital requirements because you're less complex.


  • You're simpler.


  • When Citi's finally done in creating a more simpler firm, interestingly, they're going to look more like Citigroup before the merger from 25 years ago.

    有趣的是,當花旗銀行最終完成了創建一家更簡單的公司之後,他們的樣貌將更接近 25 年前合併前的花旗集團。

  • Citigroup's history begins in 1812 with the creation of the first National City Bank.

    花旗集團的歷史始於 1812 年,在當時創建了第一家國家城市銀行。

  • The bank grew rapidly after a series of mergers and acquisitions until it was renamed Citibank in 1976.

    在一系列的併購後,該銀行迅速成長,直到 1976 年更名為花旗銀行。

  • The next 10 or 15 years, it becomes the biggest credit card issuer in the country.

    在接下來的 10 到 15 年裡,它成為了美國最大的信用卡發行商。

  • They expand to 90 different markets around the world and, all along, innovating.

    他們將業務擴展到世界各地的 90 個不同市場,並且始終保持創新。

  • They were the first checking account.


  • They were the first bank to offer compound interest on savings.


  • But it was the merger between Citicorp, the holding company for Citibank, and a financial services company, Travelers Group, that created the Citigroup we know today.

    然而,現在的花旗集團是由花旗銀行的控股公司 Citicorp 和金融服務公司 Travelers Group 之間的合併所造就的。

  • Their idea was to take the biggest bank in the United States and the biggest insurance company and wealth management force in the United States, and to merge them into a financial supermarket.


  • So all of your financial needs under one roof.


  • Citibank was once the biggest bank domestically with assets worth over $2.1 trillion in 2007.

    花旗銀行曾經是國內最大的銀行,在 2007 年資產價值超過 2.1 兆美元。

  • By comparison, J.P. Morgan had assets worth over $1.5 trillion, and Bank of America's was just over $1.7 trillion.

    相比之下,J.P.摩根的資產價值超過 1.5 兆美元,而美國銀行的資產價值則僅超過 1.7 兆美元。

  • But the company's dominance came to a devastating end in 2008.

    然而,該公司在市場的主導地位在 2008 年結束,並且帶來了毀滅性的後果。

  • Shares of the company collapsed from the height of over $500 in 2006 to at one point just under a dollar in 2009.

    該公司的股票從 2006 年超過 500 美元的高點,跌至 2009 年某一時刻僅僅不到 1 美元。

  • Citigroup was the poster child for what could go wrong in a financial crisis.


  • Leading up to the financial crisis, Citigroup was fairly aggressive in loading up on subprime mortgages and other risky assets that soon became toxic.


  • Citi eventually joined the list of institutions deemed too big to fail, receiving $476.2 billion in bailout from the federal government.

    花旗銀行最終加入了被認定為「太龐大以致於不能失敗」的機構名單,從聯邦政府獲得 4762 億美元的紓困援助。

  • But despite surviving the 2008 financial crisis, Citi hasn't been able to make a full recovery in the market.

    儘管在 2008 年的金融危機中倖存下來,花旗銀行在市場上並未能夠完全恢復。

  • Citi declined to put forward someone for an interview for this video.


  • If you look at a chart of the Citigroup stock, it's basically gone nowhere for the last ten years.


  • They have bounced back in the sense that their credit quality has been stable; they've been consistently profitable.


  • Their problem has been that they haven't been profitable enough.


  • Really, one of the key metrics in banking is its price to tangible book value, price to TBV.


  • And in that category, it's really far below all of its peers.


  • It trades at approximately 0.5 times book value, which is below 1, and 1 is really considered the point where below one you're really kind of destroying value for shareholders.

    它的交易價值大約是書面價值的 0.5 倍,這低於 1。通常 1 被認為是一個重要的分界點,低於 1 代表可能會對股東的價值造成破壞。

  • If you look at J.P. Morgan, it's at close to 2 at 1.8. Morgan Stanley even better at 2.

    J.P.摩根,它的比率接近 2,為 1.8。而摩根史坦利的表現更好,達到 2。

  • And so, the old saying among bank analysts is that you're supposed to buy banks when they're about 1 or below and sell them at they're about 2.

    因此,在銀行分析師之間流傳著一句古老的說法,即當銀行的比率約為 1 或以下時,你應該購買它們,而當比率約為 2 左右時,你應該賣掉。

  • Well, Citi has been below 1 for the past decade and really the entirety of the post-financial crisis period.

    花旗銀行在過去的十年裡一直低於 1,在金融危機後的整個時期都是如此。

  • Today, Citigroup mainly makes its revenue from two sources.


  • The first is Institutional Clients Group, which accounted for 54.7% of total revenue in 2022.

    第一個是機構客戶群,該部門在 2022 年佔總收入的 54.7%。

  • Contains their Wall Street businesses, their trading, their merger advisory business, and also something called Treasury Services that investors actually really love.


  • It's essentially a bank to global corporations, and they're one of the biggest Treasury services providers in the world, second only to J.P. Morgan.

    基本上,它是全球企業的銀行,他們是全球最大的財務服務提供商之一,僅次於 J.P.摩根。

  • Their second biggest division, personal banking and wealth management, accounts for 32.1% of total revenue.

    他們的第二大部門是個人銀行和財富管理,佔總收入的 32.1%。儘管他們調整了策略,

  • Despite their shift in strategy, Citi's investment in wealth management hasn't paid off yet.


  • In 2022, Citi expected their global wealth management to generate a compound annual revenue growth, in the high single digits to low teens.

    在 2022 年,花旗銀行預計其全球財富管理部門的年複合收入增長率將保持在高個位數到低青少年個位數。

  • But Citi's wealth management revenue fell 5% year over year in the second quarter of 2023.

    但在 2023 年第二季度,花旗銀行的財富管理收入同比下降了 5%。

  • The absolute revenues are hard to look at in isolation right now for a couple of reasons.


  • One is investment banking just fell off a cliff and everybody is experiencing weakness there.


  • And then secondly, you had this steady drumbeat of divestitures.


  • Citi's wealth division oversaw $746 billion globally in client assets during 2022.

    在 2022 年,花旗銀行的財富部門監管了全球共計 7460 億美元的客戶資產。

  • In comparison, Bank of America's Merrill Lynch had an asset size totaling $2.8 trillion in the same year.

    相比之下,美國銀行的美林證券在同一年的資產規模總計達到 2.8 兆美元。

  • The unfortunate thing for Citi is that they had a very good wealth management business in the form of Smith Barney,


  • but during the financial crisis, they had to sell that off and they sold it off to Morgan Stanley, which is now one of the premier wealth management franchises.


  • So they need to kind of reestablish and rebuild that.


  • So if you look at the history of Citigroup, they're trying to get back into something that they have essentially ceded to their competitors,


  • giving their competitors the juice and the ability to really make way in this business model that is highly favored right now by analysts.


  • It just wastes to be seen whether Citi will be successful.


  • I'm skeptical for as much more positive about Citi strategy when it comes to their global payments or banking or markets business.


  • I think it's to be determined how this wealth management strategy plays out.


  • Citi might be on the right path for success, but the key will lie in whether the company will be able to show sustainable growth.


  • The first step to improve is to recognize that there's a problem in the first place.


  • And so Citi has been divesting about a dozen of their consumer operations outside of the United States.


  • They're investing in their winners, just investing in their losers. They're transforming.


  • My view is always that it's not necessarily a high return on equity that makes a stock price go. It's a rising return on equity.


  • And Citi certainly has the potential for that, even though it's taken way, way longer than one could have reasonably expected.


Citigroup is in trouble.


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