Citibank National Association - Essay Example

?Citibank, N.A. Citigroup number Citibank, N.A. Citigroup Company overview Citibank National Association (formerly known as Citibank, N.A. and also known as Citibank), is one of the largest commercial banks in the world. The bank is based in New York in the United States and operates in 44 countries in North America, Latin America, EMEA and Asia (Boone and Kurtz 54). Citibank, N.A. is a wholly-owned subsidiary of the Citigroup, Inc. The company deals in various financial activities, the most popular services offered by Citibank are investment banking, consumer finance, e-commerce, mortgage lending, cash management, commercial banking and trade finance, “retail banking products and services and private banking products and services” (Boone and Kurtz 54). The bank also offers various other services to individual consumers and small businesses enterprises, such as credit cards, deposit accounts and loans. This paper presents an analysis of the strengths, weaknesses, threats and opportunities of Citibank. It would be useful in gaining important insights into the current status of the company and its future performance. It would also help in identifying the potential customers and suppliers and understand the company’s business structure, its major products and the company’s operations (Ferrel and Hartline 124). Strengths Global strength Strong brand name Citibank is a subsidiary of the Citigroup, Inc. The company operates all over the world in 44 countries in four continents. Citibank has a strong brand name. Brand name of a company is considered as a precious asset. The brand name of the company captures various dimensions of the business. It encapsulates its mission, vision, corporate values and personality (“A strong brand”). There are a number of benefits that a company enjoys form its brand name. Citibank exploits its corporate brand in order to improve its performance in the near future. Firstly, a strong brand name acts like the face of the business organization. High brand value portrays the short term aims of the corporation and reveals the position that the company targets to achieve in the international market. Corporate brand acts as an envelope or umbrella for the activities of the corporation. Citibank maintains a common company branding strategy all over the world, which helps the company to maintain a common expression (Roll, “Benefits of the Corporate Brand”). Good financial position The world has not yet recovered from the impacts of the 2008 financial crisis of the last decade and many financial institutions are facing the problem of instability. Due to robust financial infrastructure of the bank, Citibank has not been affected to a great extent during the financial crunch faced by the global market. The company enjoys a strong financial base, which is one of the major strongholds in the current period. Wide customer base The company operates all over the globe. It has its branches in the North American and Latin American countries, Asia, Europe, Middle East and the African countries. Due to such vast expanse of operations, Citibank enjoys a wide customer base. This reduces the risk factor for the organization. Infrastructure Retail banking operations in 44 countries Citibank makes strong retail banking operations in 44 countries in the world. It has a strong infrastructure that helps the company to operate successfully in the global platform. It helps the organization to serve the small scale businesses and the individual investors in these countries. It enables the company to reach a larger customer base and further strengthens its operations. Online services provides to millions of customers Citibank has a user friendly website that offers updated information regarding the products and services offered by the company. The website also allows customers to communicate with the bank with regard to their enquiries as well as accessing various services offered by the bank. The bank has different portals through which the customers can make transactions with the bank. More than 15 million customers use the online services of the bank. This is a step that has empowered the bank on the global platform and it can now reach those customers that cannot physically visit the branches. Broad product portfolio The world is undergoing a phase of rapid technological progress. This is increasing competition for companies. Citibank faces this steep competitive business environment by developing a strong product strategy. The company has a broad product portfolio. Strategists in the company scrutinize every single product in the product portfolio of the company to assess the relevance and importance of the product in the current business environment (Anand, “The Value of a Broader Product Portfolio”). Every product that is included in the product portfolio should be valuable to the company in the sense that it is capable of generating maximum yield. Citibank regularly scrutinizes its product portfolio and eliminates those products that are unprofitable. However, the company maintains a broad portfolio, which is a mix of less profitable and highly profitable products. Such a portfolio enables the company to capture high value in the long run. Weaknesses Citigroup in Japan Citigroup faced an ethical issue in its operations in Japan in the year 2004. The Japanese banking regulatory committee annulled the parent group’s private bank’s license that prohibited the company from operating in the country. The CEO of the company apologized to the regulators formally. The company’s reputation was hurt as a result of this incident. Ethical concern has now become a sensitive issue for the company and its operations (Garcia 53). Decline capital adequacy After the structured investment vehicle (SIV) was inserted into the balance sheet of the Citigroup, significant changes were noticed in the performance level of the company. The company’s balance sheet revealed an expansion of USD 59 billion in the last quarter of 2007. By March in the next year, capital adequacy ratio started to decline. Hence, the lending capacity of the bank deteriorated significantly. The assets that were absorbed newly began to worsen. Exposure to subprime Although Citigroup boasts of advanced risk management skills and a strong financial position in the current global business scenario, investigations show that the company has been exposed to the subprime crisis heavily. The company has been accused of misleading its investors with inappropriate information regarding the exposure faced by the company to the “subprime mortgage-related assets” (“SEC Charges Citigroup and Two Executives for Misleading Investors about Exposure to Subprime Mortgage Assets”). This has taken toll on the trust of its clients and other stakeholders. Threats: Changing government regulations and financial crisis like recessions The post-financial crisis recession has caused concern among the governments regarding the pattern of governance in the economy. Governments of many developing countries are following contractionary monetary policies in order to deal with the economic problem of inflation. If there is a rise in interest rate or credit facility of the banks are suppressed by government regulation, it reduces customers and hence their profits. US mortgage market is instable The US mortgage market shows signs of instability even four years after the crisis period formally ended. The effect of housing recession is the origin of this instability. High market fluctuations show that performance of the bank would not be stable in the short run. This might have serious negative implications on the profits of the bank. Opportunities Expansion in other countries Citibank is a subsidiary of the Citigroup and currently operates in a large number of countries. The bank has a strong infrastructure that would help the company to expand its operations to other countries. Developing countries offer huge opportunity to the company for expanding its services. For instance, China and India are emerging as some of the fastest growing countries. They therefore, pose great demand for financial services (Dodaro 246). Diversifying portfolios for customers Diversification of product portfolio is one of the most vital opportunities of growth for the company in the current business situation. By diversifying the products that the company offers, Citibank aims at catering to different target segments at the same time. This would allow the company to increase its customer base by bringing in new potential customers within the target segment. Growth in infrastructure sector The countries (both developed and developing) are fighting the effects of recession. The major thrust of development in these economies is achieved by boosting up construction activities of the economy. Major funding is required for the construction of infrastructure, such as, roadways bridges and railroads, telecommunications facilities, and electrification of the rural areas. The fund required for launching these projects are received in the form of loans. In this context, Citibank has a golden opportunity to provide credit to the agencies that are undertaking these construction projects (Hanson 272). Conclusion The current business environment has developed a situation of high competition in the international market. In this scenario the companies have to make caution moves to bank upon their strengths and devise strategies to improve the weak points. This paper provides an overview of the strengths and weaknesses of Citibank and also indentifies the threats faced by the firms and the opportunities that it should grab for further development. The discussion presented above shows that the global recession has created barriers in the path of profit maximization by the firm, but at the same time there are various opportunities that have arisen from such an economic situation. The bank has to utilize these opportunities wisely in order to proper in the long run. Works cited “A strong brand.” Clarity. Clarity Marketing Ltd., 2005. Web. 30 Aug. 2013. Anand, Bharat N. “The Value of a Broader Product Portfolio.” HBR. Harvard Business School Publishing, January 2008. Web. 30 Aug. 2013. Boone, Louis. E. and David L. Kurtz. Contemporary Marketing. Connecticut: Cengage Learning, 2011. Print. Dodaro, Gene L. Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues. DIANE Publishing, 2009. Print. Ferrel, Odies C. and Michael D. Hartline. Marketing Strategy. Connecticut: Cengage Learning, 2010. Print. Garcia, Helio Fred. Reputation Management: The Key to Successful Public Relations and Corporate Communication. New York: Taylor & Francis. Hanson, James A. The growth in government domestic debt: Changing burdens and risks. Paris: World Bank Publications. 2007. Print. Roll, Martin. “Benefits of the Corporate Brand.” Branding Strategy Insider. The Blake Project. 20 Jul. 2009. Web. 30 Aug. 2013. “SEC Charges Citigroup and Two Executives for Misleading Investors about Exposure to Subprime Mortgage Assets.” SEC. U.S. Securities and Exchange Commission, 2010. Web. 30 Aug. 2013. Read More