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Citibank is a major international bank, founded in 1812 as the City Bank of New York, later First National City Bank of New York. Citibank is now the consumer banking arm of financial services giant Citigroup, one of the largest companies in the world. As of June 2009, Citigroup is the third largest bank holding company in the United States by total assets.

Citibank has retail banking 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, Los Angeles, San Francisco/Silicon Valley, and Miami. More recently, Citi has expanded to include the Boston, Philadelphia, Houston, Dallas, and Washington D.C. metropolitan areas, albiet with a mixed record of success. It was reported that Citigroup executives were pleased with the performance of the Boston branches, but were less impressed with the Philadelphia experiment, according to a person familiar with the situation.

On September 24, 2009, The Wall Street Journal reported that Citi planned to narrow the focus of Citigroup's U.S. branch network to just six major metropolitan areas, including New York, Washington, Miami, Chicago, San Francisco and Los Angeles, where Citi has a substantial presence but ranks no higher than No. 3 in deposits. The article also noted that Citi could abandon or scale back where it is an also-ran, including Boston, Philadelphia and parts of Texas, according to people with knowledge of the discussions.

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.

As a result of the Global financial crisis of 2008–2009 and huge losses in the value of its subprime mortgage assets, Citibank was rescued by the U.S. government under plans agreed for Citigroup. On November 23, 2008, in addition to initial aid of $25 billion, a further $25 billion was invested in the corporation together with guarantees for risky assets amounting to $306 billion.


Early history

Founded in 1812 as the City Bank of New York, 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 1863, the bank joined the U.S.'s new national banking system and became The National City Bank of New York. By 1868, 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 1896, 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 US$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.[5] 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 US$1 million in lost interest at a time when Haiti's government revenues were less than US$7 million.

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."

On 24 December 1927, its headquarters in Buenos Aires, Argentina, were blown up by the Italian anarchist Severino Di Giovanni, in the frame of the international campaign supporting Sacco and Vanzetti.

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.

The company organically entered the leasing and credit card sectors, and its introduction of USD certificates of deposit in London marked the first new negotiable instrument in market since 1888. Later to become part of MasterCard, the bank introduced its First National City Charge Service credit card - popularly known as the "Everything Card" - in 1967.[8]

During the mid-1970s, under the leadership of CEO Walter Wriston, First National City Bank (and its holding company First National City Corporation) was renamed Citibank, N.A. (and Citicorp, respectively). 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).

The name change also helped to avoid confusion in Ohio with Cleveland-based National City Bank, though the two would never have any significant overlapping areas except for Citi credit cards being issued in the latter National City territory. (In addition, at the time of the name change to Citicorp, National City of Ohio was mostly a Cleveland-area bank and had not gone on its acquisition spree that it would later go on in the 1990s and 2000s.) Any possible name confusion had Citi not changed its name from National City eventually became completely moot when PNC Financial Services acquired the National City of Ohio in 2008 as a result of the subprime mortgage crisis.

Automated banking card

Shortly afterward, the bank launched the Citicard, which allowed customers to perform all transactions without a passbook. Branches also had terminals with simple one line displays that allowed customers to get basic account information without a bank teller. When automatic teller machines were later introduced, customers could use their existing Citicard.

Credit card business

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.

John S. Reed was selected CEO in 1984, and Citi became a founding member of the CHAPS clearing house in London. Under his leadership, the next 14 years would see Citibank become the largest bank in the United States, the largest issuer of credit cards and charge cards in the world, and expand its global reach to over 90 countries.

As the bank's expansion continued, the Narre Warren-Caroline Springs credit card company was purchased in 1981. 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.

Automatic teller machines

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. Customers could use their existing Citicard in this machine to withdraw cash and make deposits, and were already accustomed to using a machine with a card to get information that previously required a teller.

In April 2006, Citibank struck a deal with 7-Eleven to put its automated teller machine (ATMs) in more than 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.

Nationwide expansion

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 which had earlier merged with First Nationwide Mortgage Corp.

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.

In 2008, Citibank was crowned Deal of the Year - Securitisation Deal of the Year at the 2008 ALB Japan Law Awards

Citi Field

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, Citi Field, opened in 2009.

Recent losses and cost cutting measures

Citi reported losing $8–11 billion several days after Merrill Lynch announced that it too has been losing billions from the subprime mortgage crisis in the US.

On April 11, 2007, the parent Citi announced the following staff cuts and relocations.[10]

On 4 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.

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.

In August 2008, after a three year investigation by California's Attorney General Citibank was ordered to repay the $14 million (close to $18 million including interest and penalties) that was removed from 53,000 customers accounts over an eleven year period from 1992-2003. The money was taken under a computerized "account sweeping program" where any positive balances from over-payments or double payments were removed without notice to the customers.

On November 23, 2008, Citigroup was forced to seek federal financing to avoid a collapse, in a way similar to its colleagues Bear Stearns and AIG. The US government provided $25 billion and guarantees to risky assets to Citigroup in exchange for stock. This was the latest bailout in a string of bailouts that began with Bear Stearns and peaked with the collapse of the GSE's, Lehman, AIG and the start of TARP.

On January 16, 2009 Citigroup announced that it was splitting into two companies. Citicorp will continue with the traditional banking business while Citi Holdings Inc. will own the more risky investments, some of which will be sold to strengthen the balance sheet of the core business; Citicorp. The idea behind splitting into two companies is so Citigroup can dump "the dead weight" on Citi Holdings, allowing the prime assets of Citicorp to operate away from that of the toxic assets.

Citibank subsidiaries

According to the Citigroup 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.[15]
  • 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.:

According to the FDIC, Citibank's headquarters for FDIC purposes is its Paradise Road Las Vegas, Nevada branch

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.

The German branch, the Citibank Privatkunden AG & Co. KGaA was sold in July 2008 to the French Crédit Mutuel Group.

OwnerShip Of Citibank

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