Since the company collapsed in the 2008 recession, Citigroup shares have struggled steadily, shares drop of more than 30% in the last five years.
In response, Jane Fraser, CEO of Citigroup, announced a bold change in the company’s strategy, and it exited 14 consumer markets outside the United States since April 2021.
“What’s been obvious to analysts for a long time is that Citi had become too big and too big to handle,” said CNBC banking reporter Hugh Son. “At the end of the day, a lot of disparate parts overseas didn’t really have a lot of synergies between them.”
Citigroup instead announced its intention to divert resources and double wealth management. It’s a tactical move that several other major banks like Bank of America and Wells Fargo have taken 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,” according to Mike Mayo, senior banking analyst at Wells Fargo Securities. “And it carries less risk of big crashes, so the regulatory treatment is better.”
Despite the change in strategy, Citigroup’s investment in wealth management has not begun to pay off. In 2022, the company expected global wealth management to generate compound annual revenue growth in the high single digit numbers for low teens.
But, instead, Citigroup’s wealth management revenue fell 5% year-over-year in the second quarter of 2023.
“He’s waiting to see if Citigroup will succeed,” Mayo said. “I’m skeptical, as much as I’m more positive about Citi’s strategy in terms of its global payments, banking business, or markets. I think it’s yet to be seen how that wealth management strategy plays out. .”
Citigroup declined to provide CNBC with anyone to interview for this story.
Watch the video above to see how Citigroup plans to return.
