Citibank
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| Citibank N.A. | |
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| Type | Subsidiary (of Citigroup) |
| Founded | 1812 |
| Headquarters |  New York City, New York |
| Key people | Adjoa — CEO; Gary Crittenden — CFO; |
| Industry | Finance |
| Products | Financial Services |
| Website | www.CitiBank.com |
Citibank is a major international bank It includes CitiCorp which means it is a trusted entity, founded in 1812 as the City Bank of New York, later First National City Bank of New York. Citibank is now the consumer and corporate banking arm of financial services giant Citigroup, one of the largest companies in the world. As of March 2007, it is the largest bank in the United States by holdings.[1] Its single largest shareholder is Prince Al-Waleed bin Talal of Saudi Arabia, who has a 4.4% stake.[2]
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[edit] History
Founded in 1812 as the City Bank of New York by a group of New York merchants, the bank's first head was Samuel Osgood, who had been the first United States Postmaster General. Subsequently, ownership and management of the bank was taken over by Moses Taylor, a protégé of John Jacob Astor and one of the giants of the business world in the 19th century. During Taylor's ascendancy, the bank functioned largely as a treasury and finance center for Taylor's own extensive business empire.
In 1865 the bank joined the U.S.'s new national banking system and became The National City Bank of New York. By 1894, it was considered one of the largest banks in the United States, and in 1897, it became the first major U.S. bank to establish a foreign department. In 1913 it was the first contributor to the Federal Reserve Bank of New York.
National City became the first U.S. national bank to open an overseas banking office when its branch in Buenos Aires, Argentina was opened in 1914. Many of Citi's present international offices are older; offices in London, Shanghai, Calcutta and elsewhere were opened in 1901 and 1902 by the International Banking Corporation (IBC), a company chartered to conduct banking business outside the U.S., at that time an activity forbidden to U.S. national banks. In 1918, IBC became a wholly owned subsidiary and was subsequently merged into the bank. By 1919 the bank had become the first U.S. bank to have $ 1 billion in assets.
In 1910, National City bought a significant share of Haiti's National Bank (Banque de la Republique d'Haiti) which functioned as the country's treasury and had a monopoly on note issue.[3] After the American invasion of Haiti, it bought all of the capital stock of the Banque de la Republique. The bank became the target of criticism for what were considered to be monopolistic and unfair banking practices. It initially did not pay the Haitian government interest on surplus money that it deposited in the treasury, which was loaned out by City Bank in New York. After 1922, it began paying interest, but only at a rate of 2% compared to the 3.5% that it paid to similar depositors. Economist and Senator Paul Douglas estimated that this amounted to $1 million in lost interest at a time when Haiti's government revenues were less than $7 million.[4]
Charles E. Mitchell was elected president in 1921 and in 1929 was made chairman, a position he held until 1933. Under Mitchell the bank expanded rapidly and by 1930 had 100 branches in 23 countries outside the United States. In 1933 a Senate investigated Mitchell for his part in tens of millions dollars in losses, excessive pay, and tax avoidance. Senator Carter Glass said of him, "Mitchell more than any 50 men is responsible for this stock crash."[5]
In 1952, James Stillman Rockefeller was elected president and then chairman in 1959, serving until 1967. Stillman was a direct descendant of the Rockefeller family through the William Rockefeller (the brother of John D.) branch; in 1960 his second cousin, David Rockefeller, became president of Chase Manhattan Bank, National City's long-time New York rival for dominance in the banking industry in America.
Following its merger with the First National Bank, the bank changed its name to The First National City Bank of New York in 1955, then shortened it to First National City Bank in 1962, and ultimately changed it to Citibank in 1976. By that time, the bank had created its own "one-bank holding company" and had become a wholly owned subsidiary of that company, Citicorp (all shareholders of the bank had become shareholders of the new corporation, which became the bank's sole owner).
In the 1960s the bank entered into the credit card business. In 1965, First National City Bank bought Carte Blanche from Hilton Hotels. However after three years, the bank (under pressure from the U.S. government) was forced to sell this division. By 1968, the company created its own credit card. The card, known as "The Everything Card," was promoted as a kind of East Coast version of the BankAmericard. By 1969, First National City Bank decided that the Everything Card was too costly to promote as an independent brand and joined Master Charge (now MasterCard). Citibank unsuccessfully tried again in 1977–1987 to create a separate credit card brand, the Choice Card.
In 1981, Citibank chartered a South Dakota subsidiary to take advantage of new laws that raised the state's maximum permissible interest rate on loans to 25 percent (then the highest in the nation). In many other states, usury laws prevented banks from charging interest that aligned with the extremely high costs of lending money in the late 1970s and early 1980s, making consumer lending unprofitable.
Citibank was one of the first U.S. banks to introduce automatic teller machines in the 1970s, in order to give 24-hour access to accounts.
Citibank's major presence in California is fairly recent. The bank had only a handful of branches in that state before acquiring the assets of California Federal Bank in 2002 with Citicorp's purchase of Golden State Bancorp.
In 2001, Citibank settled a $45 million class action lawsuit for improperly assessing late fees. Following this Citibank lobbied the United States Congress to pass legislation that would limit class action lawsuits to $5 million unless they were initiated on a federal level. Some consumer advocate websites report that Citibank is still improperly assessing late fees.
In August 2004, Citibank entered the Texas market with the purchase of First American Bank of Bryan, Texas. The deal established Citi's retail banking presence in Texas, giving Citibank over 100 branches, $3.5 billion in assets and approximately 120,000 new customers in the state. First American Bank was renamed Citibank Texas after the take-over was completed on March 31, 2005.
It is hoped that with both California and Texas markets, Citibank can appeal to both states' Latino population, and offer products on both sides of the border through Citibank in the U.S., and Banamex (Citigroup's Mexican division) in Mexico.
Citibank has operations in more than 100 countries and territories around the world. More than half of its 1,400 offices are in the United States, mostly in the New York City, Chicago, Miami, and Washington DC metropolitan areas, as well as in California.
In addition to the standard banking transactions, Citibank offers insurance, credit card and investment products. Their online services division is among the most successful in the field, claiming about 15 million users.
In April 2006, Citibank struck a deal with 7-Eleven to put its automated teller machine (ATMs) in over 5,500 convenience stores in the U.S. In the same month, it also announced it would sell all of its Buffalo and Rochester New York branches and accounts to M&T Bank.
It was announced on November 13, 2006 that Citibank would be the corporate sponsor of the new stadium for the New York Mets. The stadium will open in 2009 and be called Citi Field.
On April 11, 2007, the parent Citi announce the following staff cuts and relocations.[6] On 4th November, 2007, Charles "Chuck" Prince quit as the chairman and chief executive of Citigroup, following crisis meetings with the board in New York in the wake of billions of dollars in losses related to subprime lending.
Citi is reportedly losing $8–11 billion, several days after Merrill Lynch announced that it too has been losing billions from the subprime mortgage mess in the US. Former United States Secretary of the Treasury Robert Rubin has been asked to replace ex-CEO Charles Prince to manage the losses Citi has amassed over the years of being over-exposed to subprime lending during the 2002–2007 surge in the real estate industry.
[edit] Citibank subsidiaries
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According to the Citigoup website, until October 2006, Citibank ran the following subsidiaries:
- Citibank, N.A.(National Association) - The "original" Citibank, primarily doing business in New York State and the tri-state New York City metropolitan area. Also the parent company of the other subsidiaries.
- Citibank Canada.[7]
- Citibank Texas, N.A. - The former First American bank.
- Citibank (West), F.S.B. - The former Citicorp Savings (a savings and loan operating in California), as well as the former California Federal Bank and Golden State Bank.
- Citibank, F.S.B. - The primary Citibank subsidiary serving all other states, based in Chicago.
- Citibank Banamex USA - Formally California Commerce Bank, Banamex's U.S. banking division.
- Citibank (South Dakota), N.A. - A credit card and lending-only bank based in Sioux Falls, South Dakota, including the former Associates National Bank.
- Universal Financial Corp. - A credit card bank, purchased in 1997, that manages the AT&T Universal Card.
On October 1, 2006, a massive re-organization designed to streamline the various Citibank banking charters occurred. Under the new structure, the following divisions were consolidated into:
- Citibank, N.A.:
- Citibank, FSB
- Citibank (West), FSB
- Citibank, Texas, N.A.
- Citibank Delaware
- Citibank Banamex USA
- Citicorp Trust, N.A. (California)
- Citibank South Dakota, N.A.:
- Citibank, Nevada, N.A.
- Citibank USA, N.A.
- Universal Financial Corp.
- Citibank South Dakota, FSB
As of December 2006, these are the only two Citibank banking divisions: Citibank, N.A. and Citibank South Dakota, N.A.:
- Citi Bank ATM/Debt Cards.
In addition to these divisions, Macy's Inc under its former corporate name Federated Department Stores, finalized an arrangement with Citigroup to sell its consumer credit portfolio, reissuing its cards under the Federated-Citigroup Alliance name Department Stores National Bank (DSNB) and allowing Federated to continue servicing the credit accounts from its Financial, Administrative and Credit Services Group (FACS Group Inc.). The cards involved are Macy's and Bloomingdale's.
Citibank's private-label credit card division, Citi Commerce Solutions, issues store-issued credit card for such companies as: Sears, ConocoPhillips, ExxonMobil, The Home Depot, Staples, Shell Oil, and others.
In the early 1990s, Citibank opened a credit card payment processing center in Las Vegas, Nevada but would only open the center if it was allowed to use "The Lakes, Nevada" address located in The Lakes, Las Vegas to avoid the negative connotation associated with Las Vegas. "The Lakes" is not actually an official township; rather, it's a small master planned community. However, the government approved the unusual address request citing the large number of jobs that it would bring to the area. The move angered some Las Vegas natives who felt that the bank was shunning the city's identity.
[edit] Humanware
Humanware refers to a now-defunct division of Citibank that designed the user interfaces for Citibank's electronic products. Founded in approximately 1987, Humanware was part of the Consumer Development Division and typically consisted of a core group of several dozen Citbank employees and several dozen freelance consultants. Before the Humanware department was disbanded around 1993 due to budget cuts, Humanware had designed interfaces for, among other things, customer service representative workstations, cash machines, Citiphone banking (bank by phone), and the Enhanced Telephone.
Citibank tested many of its products in videotaped focus groups held at The Lab, a full-size mock bank branch in a formerly secret midtown Manhattan location that included functional ATMs, mannequins in place of bank tellers, and one-way mirrors.[8]
[edit] Miscellaneous financials
- Fiscal year end: December
- 2005 Sales $83,642,000,000
- 2005 Net Income $24,589,000,000
- 2006 Employees 300,000
- 2005 Year End Assets $1.50 trillion US Dollars
[edit] Key people
- Vikram Pandit — CEO, Citibank
- Sir Win Bischoff —
- Alwaleed bin Talal — Major Shareholder.
[edit] See also
- Rockefeller family
- William Rockefeller
- David Rockefeller
- Vladimir Levin The pseudonym of the mastermind of a group of hackers that stole $10 million from Citibank
- Citigroup The parent company of Citibank
- Citigold
[edit] References
- ^ Top 50 bank holding companies Summary Page
- ^ Alwaleed: Businessman, Billionaire, Prince by Riz Khan
- ^ Schmidt, Hans. The United States Occupation of Haiti, 1915–1934. New Brunswick, NJ: Rutgers UP, 1971.
- ^ Douglas, Paul H. from Occupied Haiti, ed. Emily Greene Balch (New York, 1972), 15-52 reprinted in: Money Doctors, Foreign Debts, and Economic Reforms in Latin America. Wilmington, Delaware: Edited by Paul W. Drake, 1994.
- ^ Damnation of Mitchell Time Magazine 1929.
- ^ Citigroup job cuts could cut crucial revenue, too - Apr. 11, 2007
- ^ http://www.citibank.com/canada/homepage/english/index.htm
- ^ "Banking Futures: Somewhere in Gotham City a Bank is Testing Technology". (February, 1990). Scientific American.
[edit] Further reading
- Wriston: Walter Wriston, Citibank, and the Rise and Fall of American Financial Supremacy. Phillip L. Zweig, New York: Crown, 1996.
- Citibank, 1812–1970. Harold van B. Cleveland & Thomas F. Huertas (Harvard Business History Studies), Boston: Harvard University Press, 1985.
[edit] External links
- Citibank official web site
- Citigroup official web site
- Citibank history timeline
- Citibank credit cards
- Citibank student loans
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