Citibank USA: "the Citi never Sleeps", to Protect Customer Information
Citigroup is the third largest company in the US in terms of holding domestic assets. Citibank is the retailing arm of Citigroup, and is a primary dealer in US Treasury Securities. Citicorp ranks third in the US, after Bank of America and JP Morgan Chase. Citibank was the first bank to introduce the ATM facility in 1970, in order to allow customers to access their accounts around the clock. Its product portfolio consists of various products and services like: personal banking, personal loan, saving and investment solutions, mortgages, home loans, credit cards, etc.
More than half of Citibank's 1400 locations are in the US, including Chicago, Los Angeles, New York, the San Francisco Bay Area, Washington DC, and Miami. Citibank recently opened new branches at Boston, Philadelphia, Houston and Dallas. Citibank had been one of the largest financial institutions of the US until recession struck in 2008. The US government had to bail out Citigroup with a massive stimulus package. Today, the bank is slowly trying to recover from the mortgage bubble.
Though the US market could not free itself from the serpentine grasp of recession, some global banks like HSBC were able to wriggle through with little damage. This bank, with a few other financial institutions like Bank of America, JP Morgan Chase, Wells Fargo and Company, Morgan Stanley, and Deutsche Bank AG, has been giving Citibank a good run for its money. Despite the tough competition, Citibank posted revenues of $ 3.3 billion for Q2 of 2011, a 24% increase from the revenues posted during Q2 of 2010.
Though this revenue showed an increase, revenue from North America continued to lag. There was also an increase of 10% in operating expenses. This position definitely does not forecast a bright future. Citigroup's only opportunities now lie in hunting for opportunities wherever they are. Targeting economies emerging elsewhere in the world could possibly balance the struggling US economy for a while. The easy money policy at the Fed, which can be facilitated by borrowing short and buying other secure debt, is a great opportunity for Citibank in the US. Though the company has suffered due to recession, the fact that it has had two quarters of profit is definitely a silver lining.
The flip side to this is that the Fed rates could change at any time, increasing the threat faced by Citibank. Also, the recently passed financial reforms and legislation may increase operational costs, or serve as obstacles to certain bank operations. The US treasury still has a substantial stake, which is a cause for concern. If treasury starts selling big, it could put downward pressure on Citibank's share price. As part of its future plans, Citibank wants to expand its retail business in the U.S. It also wants to start a social networking site for the children of very rich clients.
Citibank will have to get rid of the potential stumbling blocks in its way, before it commences its rebuilding process. Recently, in May 2011, hackers manage to penetrate Citibank's website, and access names, account numbers, and contact information of thousands of customers. Though Citibank claims that only 1% of their 21 million customers were impacted, the complexity of the situation cannot be undermined. Citibank is under heavy scrutiny right now, both due to the hacking, and also due to the fact that it failed to report the cyber-attack.
-Will Citibank be able to safeguard customer information from further attacks?
-Considering the fact that operational costs are going up, and profits going down, will Citibank be able to expand in the US and implement its future plans?