Citi sees a quarterly decline in investment banking and an increase in market activity

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People walk under the logo of a Citibank branch in the financial district of San Francisco, California July 17, 2009. REUTERS/Robert Galbraith

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June 15 (Reuters) – Citigroup’s (CN) global head of markets Andy Morton told an investor conference on Wednesday he expected a drop of up to 55% in the banking business bank investment this quarter and an increase of more than 25% business market.

Citi outperformed the S&P 500 Banking Index (.SPXBK), up 1% on the day, with shares of the company lately rising 2.6% to $47.14, poised for its second straight day of gains after a four-day selloff in which it fell more than 12%.

Morton, speaking on the webcast of a Morgan Stanley conference, said a drop in issuance and mergers and acquisitions (M&A) due to the macroeconomic and geopolitical situation was behind the decline in the investment bank.

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“Our belief is that the portfolio is down 50% to 55% in investment banking, and our assessment is that we’re going to get to roughly those kinds of levels,” Morton said.

But he said Citi’s markets business was a different story due to market volatility across all assets, including commodities and currencies, one of its key segments.

Morton said his current estimate called for second-quarter revenue to rise year-over-year “north of 25%” in the markets, although the executive said volatility also meant the situation could change quickly.

“Just given the volatility, you know, even two weeks from now when you have moves like we’ve had for the last few days or so, obviously that number could fluctuate,” he said, adding that the Business activity had risen by about a third for the second quarter.

Since Citi’s business in the fixed income markets was much larger than its equity business, the executive said Citi was looking for “low-hanging fruit” to expand into equities, including seeking to secure the equity business of its fixed income clients.

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Reporting by Noor Zainab Hussain and Sinéad Carew; Editing by Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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