Citibank is the nation’s fourth largest bank, with assets of $1.36 trillion. The more than 200-year-old institution has made an indelible mark on American finance, especially when it comes to credit cards. Citi is the world’s largest credit card issuer, with more than 138 million accounts, $363.9 billion annual purchase sales and $133.2 billion in average receivables across Citi Branded Cards and Citi Retail Services.
Citi isn’t just a household name here, but abroad, doing business in more than 160 countries and jurisdictions. It offers consumers, corporations, governments and institutions with a wide range of financial products and services, such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
While talk of the global economy is old hat now, Citi was way ahead of the curve. Back in the 80s it touted the fact that its eyes were on the whole world with its ads that proclaimed, “The Citi never sleeps,” not only meaning that it was operating everywhere, but that it pulls out all the stops to serve its customers.
Citi is known for innovation. Before ATMs it had a bank card and terminals, and it was one of the first to have ATMs. Citi has shown it's not afraid to buck convention. Some thought maybe the top guns had lost their minds in the early 80s when Citi’s credit card operations moved to South Dakota. But Citi had the last laugh. South Dakota legislators lifted the cap on credit card interest rates, which was huge for Citi with its credit card business. Other financial institutions followed Citi’s lead, and South Dakota became a surprising place for back office operations for financial services corporations. Citi’s credit card business went from being a loss leader to become wildly profitable.
Credit cards have been a blessing and a curse of sorts for Citi. Last year, it was ordered to pay $770 million in relief to borrowers for illegal credit card practices. The Consumer Financial Protection Bureau said about seven million customer accounts were impacted by Citi’s “deceptive marketing practices.” The watchdog group said Citi misrepresented costs and fees and charged customers for services they didn’t receive.
That was far from Citi’s first stain on its reputation. Citigroup had to pony up a $7 billion settlement with the Justice Department to make amends for what then Attorney General Eric Holder called “egregious misconduct” in the years leading up to the 2008 financial crisis. In the settlement, the bank admitted to its misdeeds. According to published reports, the federal government accused Citi of knowingly hiding the extensive problems it had discovered with the mortgages it was securitizing, which contributed to the crash of the financial system.
Without a doubt, Citi has had its share of controversies. But among many smart strategies employed by Citi, some experts applaud the fact that Citi is no longer heavily dependent on the repo market to fund its operations. It was pointed out in a Fool.com article, how relying on the repo market for financing is tricky. For one thing, “creditors in the repo market are sophisticated enough to recognized when trouble is afoot in the financial markets. Because of the short-term nature of repo financing, they can pull their funds with very little notice merely by refusing to roll them over when they mature the following day.” According to Fool.com in 2006, nearly a quarter of the bank’s core financing came from the repo market, compared to less than 13% currently. That reduction is good news, so says Fool.com.
Citi, however, is also known for its philanthropy, its giving to the arts and elsewhere. It gets its share of awards and recognitions. In 2013 it was named Global Bank of the Year in the Banker’s Annual Awards. Citi, with more than 1,000 branches, and some 161,000 employees, continues to grow. Its assets were up 2% in 2015. Competitors will do well to remember claims made years ago, “The Citi never sleeps.”