My Missed Opportunity To Break Up Citibank

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From the personal stories archive….

In 2000, while working for another analyst firm, I wrote a report called Atomizing Financial Services. In it, I predicted/prescribed that large financial services would/should break up into smaller organizations (atomize, get it?).

Among the inputs/conclusions for this view were the beliefs that: 1) Consumers did not/would not want to consolidate accounts with a single FI; 2) Technology would continue to make it easier for consumers to manage multiple relationships, further making point #1 even more feasible; and 3) Technology would make it easier and more profitable for firms to serve small (or smaller) segments of customers (i.e., make economies of scale less relevant).

The intervening 12 years has certainly not proved me right, eh?

But not long after publishing that report, I got a call from a client at Citibank who had read it and wanted to talk about. He asked me something that I’ve never forgotten.

Before I tell you what he asked, let’s put this in perspective. About 5 minutes ago, my wife asked me to do something, and I’ve already forgotten what I’m supposed to do. Hate to admit this, but although I’ll remember your face 10 years after meeting you, I’ve forgotten your name after 10 minutes, and after 10 days I’ve forgotten where I met you (yeah, I know, I gotta get better at that).  So remembering this guy’s question after 12 years is pretty remarkable.

He asked: “If I got you a meeting with (then Citi CEO) Sandy Weill, would you argue the case why Citi should split itself up?”

Now, I realize that you probably think I meet with and influence the CEOs of the world’s largest financial institutions every day (you don’t? damn, my PR department isn’t doing its job). But this was a big deal.

Here’s what I said: “Thanks, but no thanks.”

It was the right decision. I’m always willing (and look forward to) standing behind my recommendations/predictions, but to argue that Citi should split up would’ve required me to have a pretty detailed picture of the economics of each business unit, and the financial impact of a break up. I didn’t have the picture, and couldn’t pull it together.


Why tell this story now?

American Banker recently ran an article titled Sandy Weill Says Banks Should Be Broken Up. According to Weill:

“What we should probably do is go and split up investment banking from banking. The world we live in now is not the world we lived in 10 years ago. Good things are simple.”

Damn. I could’ve told him that.

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