Citigroup’s investment bank is embarking on an ambitious expansion in a bid to close the gap with rivals on Wall Street as the Covid-19 crisis has upended clients’ business models and spurred opportunities for traders.
The bank will hire senior dealmakers and seek to catch up with U.S. rivals including JPMorgan and Goldman Sachs at the top of the investment banking rankings after creating a series of large teams of bankers to capitalize on the disruptions accelerated by the pandemic, its Global co-heads of banking, capital markets and advisory Tyler Dickson and Manolo Falco said Financial News.
“The world is changing, and Covid-19 has only accelerated trends that were already underway and will lead to an overhaul of business models and there are megatrends that are crossing industries,” Falco said. “We are reacting to how our customers will have to adapt, but it also creates an opportunity for us to grow the business at a faster rate. »
Citigroup has long been a powerhouse in the debt capital markets, challenging JPMorgan and Bank of America for the top spot over the past decade, but has fallen behind some Wall Street rivals elsewhere. According to data provider Dealogic, it currently ranks fifth in global investment banking fee pool rankings so far in 2021, a spot it has held since 2013, behind other major US banks JPMorgan, Goldman Sachs, Morgan Stanley and Bank of America.
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He aims to disrupt that order, Dickson said, likening his ambitions to getting as many Olympic medals as possible across all geographies and product lines.
“Top three means you’re happy to be third, but we want to be medalists – we’d rather have more gold than silver, more silver than bronze, but we’ll take any of those positions. “, did he declare. “In these leadership roles, you’re relevant to your customers, differentiated Citi, and likely drive higher returns than if you were a finalist.”
On June 2, Citigroup unveiled a new health and wellness unit, hiring Goldman Sachs trader Chuck Adams to lead a team of about 210 bankers. This is his third supergroup created this year. Its former head of BCMA for Europe, the Middle East and Africa, Philip Drury, heads a technology and communications unit made up of 400 bankers, which is set to expand. About 225 bankers are also in a new unit led by Steve Trauber and Sandip Sen, focused on clean energy transition.
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Dickson said that while other banks have combined deal teams in the past, “it was really for cost savings – synergies to reduce scale. What we’re trying to do is align resources, so we can grow,” he said.
“We are increasing intellectual capital and balance sheet to take advantage of macro trends in the wake of Covid-19,” he added.
Citigroup’s next big group of bankers will likely be in its alternative asset management unit, which focuses on deals with private equity firms, sovereign wealth funds and infrastructure funds, among others. Anthony Diamandakis, the unit’s global co-head, is set to leave London for the US as part of further expansion, while Citi has hired former Credit Suisse executive Didier Denat to bolster the team in Europe.
Citi’s investment bank rebranded as BCMA about two and a half years ago, and Dickson said it has been steadily gaining market share over that time. “Now we are accelerating our growth plans,” he said, adding that the bank aims to be the “go-to bank for disruptive growth companies with transformational business models.”
The investment bank’s new ambitions come amid wider changes at Citigroup under chief executive Jane Fraser, who took over as director in March and is in the midst of what she has dubbed a “refresh of The strategy”. Fraser took over from Michael Corbat, who led the bank for eight years and is credited with streamlining its operations following the 2008 financial crisis, which hit Citi hard.
Fraser has already unveiled a new push into wealth management, as well as a pullback from 13 retail banking markets, including China and India. She told a conference earlier this month that U.S. commercial banking and retail were growth targets.
In addition to the global goal, Citigroup is aiming for a top-three position in key markets, including the United States, United Kingdom, China and France, Falco said. In Europe, where it has consistently held a top three spot for the past four years, Citi is aiming for the top spot.
While the bank has already unveiled senior hires and internal transfers this year, Citi will add more senior dealmakers, Falco added.
“We will hire and bring in experienced investment bankers who can really make a difference,” he said. “The United States is essential, and we will probably attract more people there, but we are also looking to add more to the United Kingdom, France and Germany.”
The bank currently ranks fifth in the US, which is the biggest market for fees, and seventh in the UK – a critical country for European revenue, according to Dealogic.
Citigroup also faces fierce competition from its Wall Street rivals, which have also poached senior dealmakers and targeted growth.
JPMorgan unveiled former Bank of America European corporate and investment banking chief Bob Elfring in June. He was named vice president, tasked with closing deals with the bank’s biggest clients, and joins a team of senior bank dealmakers tasked with gaining market share to extend his lead at the top.
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Meanwhile, Bank of America has an ongoing goal of being a top three investment bank in every industry and country under the leadership of the corporate banking boss and investment, Matthew Koder. Goldman Sachs has revamped the top of various lines of investment banking business over the past year and hired 170 bankers to focus on smaller businesses in a bid to boost revenue.
Dickson said there needs to be a “mindset shift” within Citi to be “even more aggressively focused” on differentiating the bank’s advice to customers.
“Competition is solidified between U.S. banks, which have a very strong global position, and thought leadership will come from those banks that define the future – where the puck is going to be, rather than where it is,” he said. .
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