Citibank should be a small bank
代写金融市场paper This can only be achieved through scaling down. Scaling down will also allow them to conduct complete performance reviews to do
The Citibank, would be better served by scaling back and repositioning itself as smaller financial institution. The importance of scaling back on the bank will be explained in terms of the global perspective, the bank's competitive point, operations and strategic perspective. From a diversification point of view if the bank chooses to remain a big institution it open itself up to systemic risk. This is mostly because most industries have suffered greatly in the wake of the Corona Virus and the markets are struggling to recover. This means there is a large possibility some markets may crush. As Citibank's share dropped in 2020 from $2.08 to $1:92 and the bank currently has a lower liquidity ratio of approximately 118% (“Contents of Granted Research Report,” p.15).
The banks in terms of globalization could be better served if the bank scaled back to a manageable size. 代写金融市场paper
As the bank was already in existence scaling down does not affect the existing global footprint of the bank. The latter will instead open the bank to more joint ventures with other institutions globally. Additionally, the bank could consolidate enough capital to venture into better profitable asset markets globally. According to this year's revenue report dated 15th January 2021 average revenue for the completed year only improved by $10 billion. Though it not a loss alot more funds could be pooled together to venture into global markets. If the bank scaled down reduced on cost and improved profits and revenue.(“Contents of Granted Research Report” p.15)
In terms of competitiveness Citibank has lost some of its competitive drivers, for example. Using product market share the bank recently withdrew from some of its major markets. The bank recently announced its withdrawal from consumer banking in countries such as India, Australia, Poland, Taiwan among others. The move is intended to shift focus from consumer banking to global wealth management (“Overview of Recent Activities, p.6). However, this is an indication that the bank is not currently able to compete in this market hence focus had to be shifted. This goes to show that scaling down is important for the bank to restructure and regain its competitive advantage. 代写金融市场paper
In regards to competitors the bank is not performing well compared to its competitors. For example, both Citibank and Wells Fargo faced valuation decreases and regulatory issues yet Wells Fargo is still performing better that Citibank. Citibank is only trading at 87% despite attempts at redemption whilst Wells Fargo trades at 128%. The bank was much more profitable than the latter in 2020. The bank needs time to turn itself around and redeem itself from the low valuation but that would require certain streamlining that can only be achieved by making the bank a smaller entity.
The bank does not currently possess the geographical prowess to root itself with global markets.
The bank faced legal penalty of about 400 million in civil penalties which were issued by the cthet in late 2020 (“Overview of Recent Activities” p. 7). This in addition to the strain of the Corona Virus the bank's liquidity has been severely affected. Geographically the company has had to make cut backs to make up for revenue lost during this period which reduces it's prowess in entering global markets. Hence scaling back could help improve liquidity and allow the bank some flexibility.
From an operational perspective the company's strengths and weaknesses are the key components. 代写金融市场paper
The bank has some key strengths; however, they do not indicate the company's ability to stand on its own. For example, the company made $11 billion more which was revenue recovered after the 2020-2019 losses (“Contents of Granted Research Report,” p. 16). Additionally, the company divested more into global wealth investments and got more involved in community projects such activism and health funds. However, share price is still not expended to rise fast enough to compete with other banks such as JP Morgan and Bank of America. Some of its weaknesses include high operational costs and profits that have been lagging along the same margins.
The bank also has compliance and risk management issues . Which can be solved through streamlining and this would require the bank to scale down. The bank has doubled down on so many sectors such security services and investment banking resulting in demotion of the company as one of the highly competitive banks in the market. These factors indicate that Citibank cannot stand by itself as a big institution in this market climate.
As a recommendation the bank should productively scale down. This is because the bank itself has to fix the micro environment before tacking the macro environment.
This is to mean the company requires an internal restructure. That will fix internal issues such as high operational costs as well as the risk and compliance issues. In order to achieve profitable big bank status, the company will need to ensure efficiency and effectiveness.
This can only be achieved through scaling down. Scaling down will also allow them to conduct complete performance reviews to do away with systems and strategies that are not working. In the long-term the bank needs to get smaller to maintain its competitiveness. As it is, the bank is not attracting enough investments as very little improvement can be seen. An intricate postmortem of the bank's operations needs to be made and an adequate strategy developed to ensure that the bank survives in the long-term. Additionally, the bank could study its competitors to gain more knowledge on the current market situation.
Work Cited 代写金融市场paper
“Contents of Granted Research Report.” Hosokawa Powder Technology Foundation ANNUAL REPORT, vol. 27, no. 0, May 2020, pp. 15–17, https://doi.org/10.14356/hptf.20195.
“Overview of Recent Activities.” Hosokawa Powder Technology Foundation ANNUAL REPORT, vol. 28, no. 0, May 2021, pp. 3–9, https://doi.org/10.14356/hptf.20202.
de Fontenay, E. (2021). The $900 Million Mistake: In re Citibank August 11, 2020 Wire Transfers (SDNY 16 February 2021). Capital Markets Law Jthenal. https://doi.org/10.1093/cmlj/kmab019