Citi’s healthcare and tech investment banking supergroups seek to win

  • Citi has lost talent in technology and healthcare over the past year, and trading volume and bonuses have declined.
  • The bank’s investment banking officials say the firm is still poised to compete with its Wall Street peers.
  • Super banking groups focused on technology, healthcare, sustainability and clean energy are key to Citi’s strategy.

Senior brass at Citi’s investment banking unit are adamant the lender won’t hesitate to compete with its Wall Street peers when it comes to poaching talent and winning deals, even after a series of banker departures and questions about the company’s position in investment banking.

Philip Drury, the global head of technology and communications, told Insider in an interview that he wants the group to be a “global leader”. To get there, he’s willing to think outside the box when it comes to winning deals, motivating Citi bankers, and recruiting top talent.

He compared his ambitions for technology and communications to what he learned playing rugby in the 1990s for professional club London Irish under England manager Sir Clive Woodward, who won the World Cup. world.

“Forget you’re a center or a wing,” Drury told Insider, referring to specific positions in a rugby team. “You want the top 15 players on the pitch. We didn’t think we were playing a specific position, we were part of a team and we worked together. That’s one of the concepts behind super groups – the convergence and collaboration.

Citi’s so-called supergroups were introduced last year to complement bankers in different areas such as capital markets or advisory services, Tyler Dickson, global co-head of banking, capital markets, told Insider. capital and board of Citi. The bank currently maintains four super groups: technology and communications; health care, consumers and well-being; sustainability and business transitions; and natural resources and clean energy.

The investment bank, however, has faced complaints from some of its junior ranks about supposedly disappointing bonuses this year, while others said Citi had allocated more bonuses in the form of shares rather than cash. It is in more than one FT report last month, which said Citi would allocate most of the capital from the sale of international retail businesses to its commercial and treasury services department, the commercial bank for midsize companies and the wealth management, leaving less for investment banking.

Speaking at the bank’s Investor Day earlier this month, chief executive Jane Fraser sought to dismiss suggestions that investment banking had become a lower priority. She said Citi was “hiring more talent” and the bank was only focusing more on growing businesses in sectors such as healthcare and technology.

To highlight Citi’s investment banking spending, Fraser said the bank has hired 70 chief executives across its supergroups, including 40 located in North America.

The hiring spree is expected to continue this year, executives told Insider, including Drury, who is in charge of Citi’s largest supergroup.

“The mandate I have is to grow this team, in a meaningful way,” he said.

Analysts, however, say it’s a tall order for Citi to increase its slice of the investment banking pie, especially with the presence of peers like Goldman Sachs, JPMorgan and Morgan Stanley in the merger markets. and acquisitions and equity.

“What struck me is that in most asset classes it will be very difficult for Citi to even consider a top three,” said Richard Ramsden, who leads investment research. on financial institutions at Goldman Sachs. “The barriers are high and the cost of investing is so high.”

Picking cherries

Goldman Sachs, JPMorgan and Morgan Stanley typically hold the top three spots in US investment banking rankings. Citi ranked 5th in the U.S. M&A and equity markets last year, and was third in the debt capital markets and loan rankings, according to Dealogic.

Three Citi bankers who spoke to Insider said the bank is unlikely to make the top three, especially in the M&A and equity markets, where companies favor advice over capabilities. loan. One of the bankers said Citi to climb higher in the rankings was “a pipe dream”.

Ramsden said Citi would be better placed to “pick and choose” areas where it is more competitive, such as commerce and treasury solutions, and commercial banking, rather than trying to dominate investment banking.

Citi, in a way, recognized this approach. In a March 7 press release, it outlined plans to hire 900 people over the next three years at its commercial bank, which serves midsize businesses.

And commerce and treasury, which offers services such as holding funds and processing payments, will receive a $1 billion injection into its technology budget. He intends to target more mid-market companies and fintechs, which may one day do business with the investment bank, Insider previously reported.

Drury was buoyed by Citi’s plans to boost commercial banking and commercial and treasury services. This may translate to more activity in investment banking as young companies seek financing or advisory services for potential equity offerings or M&A opportunities.

“A commitment to commercial banking is great for our technology business because it means we’ll start covering customers even earlier in their lifecycle,” he said.

“Significant investments” in talent

Experienced technology bankers like Brian Truesdale and Dhiren Shah joined Citi last year as chairmen, while John Collmer joined in August as global head of private capital markets and brought four bankers with him. Chuck Adams also left Goldman Sachs to lead Citi’s healthcare supergroup last year.

Drury said he was granted a license to continue “making significant investments” in Citi’s technology and communications unit.

“You’ll see us compete for customer-facing bankers across all areas of technology, communications and fintech to complement the strong players we currently have on the bench,” Drury said.

One of the unique ways Drury motivates its bankers is through the introduction of a high performance coach.

Ben Fennell, a former college rugby player and founder of The Growth House in London, is partnering with Citi’s technology and communications team over the next 12 months on a program focused on behaviors, state spirit and culture within the group, said Drury. .

But despite scaling efforts, Citi has lost at least four chief executives in the past month, alongside a few directors. Last year, the bank lost five managing directors in healthcare.

“We have proven that we are ready to add places. But I think over the last two years talent acquisition has become more competitive. That has always been a distinguishing factor as to why a CEO or a CFO picks a bank,” Dickson said.

Having experienced bankers like Drury and Adams leading supergroups is comforting to clients. This shows that Citi is assigning proven dealmakers to the sectors it cares about, according to Dickson.

But by welcoming them into newly created positions, existing group leaders no longer report directly to Dickson and his BCMA global co-head, Manolo Falco.

Herb Yeh, the global head of technology investment banking, who left Citi after nearly 10 years for Evercore earlier this month, is one example.

Forming supergroups meant that Yeh was effectively “layered”, meaning his line of command was changed, according to two people familiar with the situation.

When asked if the creation of supergroups and the introduction of senior bankers like Drury and Adams had caused tension, Dickson said no.

“What members of these groups are seeing is the confidence, commitment and direction backed by successful people. This should give them increased confidence that we are moving in the right direction,” Dickson said.


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