Why Citigroup’s shift to wealth management is a risky bet
Why Citigroup’s shift to wealth management is a risky bet

Citigroup’s shares have been depressed since the company collapsed during the 2008 recession, with shares down more than 30 percent over the past five years.

In this regard, Jane Fraser, CEO of Citigroup, announced a bold change in the company’s strategy. Since April 2021, it has withdrawn from 14 consumer markets outside the United States.

“It’s been clear to analysts for a long time that Citi has become too unwieldy and too big to manage,” said CNBC banking reporter Hugh Son. There wasn’t really much synergy between them.”

Instead, Citigroup announced plans to shift resources, Doubling down on wealth management. It’s a tactical move several other major banks, including Bank of America and Wells Fargo, have made in recent years.

“It offers high returns and creates growth opportunities in regions that are in the early stages of wealth generation, like Asia and the Middle East,” said Mike Mayo, senior bank analyst at Wells Fargo Securities. “And there’s less risk of a major mishap, so Regulatory treatment is better.”

Despite the shift in strategy, Citigroup’s investments in wealth management have yet to start paying off.By 2022, the firm expects global wealth management revenue to grow at a CAGR high single digit to low tens digit.

But instead, Citigroup’s wealth management revenue in the second quarter of 2023 fell 5% year-over-year.

“It remains to be seen whether Citigroup can succeed,” Mayo said. “I’m skeptical because while I’m more positive on Citi’s strategy in global payments, banking or markets, I think it’s yet to be determined how this wealth management strategy will play out.”

Citigroup declined to provide CNBC with interviewees for this article.

Watch the video above to see how Citigroup is planning its comeback.


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