History of the Company
Citigroup is one of the Big Four banks labeled “too big to fail” by the U.S. government. It is a global financial services corporation that was formed in 1998 by a merger between Citicorp bank and Travelers Group, a financial conglomerate. Citigroup operates 200 million customer accounts in 140 countries and has 16,000 offices around the globe.
The company’s roots go back to the City Bank of New York, chartered by New York State in 1812. By 1895, the National City Bank of New York (as it was renamed) was the biggest American bank, and by 1929 was the largest commercial bank in the world.
The company pioneered a number of banking services such as compound interest on savings accounts, customer checking accounts, and unsecured personal loans. In 1998, Citicorp merged with Travelers Group to create Citigroup. It remains one of the biggest mergers in U.S. history.
Citigroup took huge losses in the subprime mortgage crisis in 2008, but because the bank was deemed too big to fail, the U.S. government offered a bailout package that amounted to the government taking a 36% equity stake in the company, thus keeping Citigroup from bankruptcy. Citigroup repaid the government in full by 2010 and the U.S. government also profited from selling its stake.
Trading Citigroup: What You Need to Know
- Citigroup’s annual report and quarterly earnings reports can provide insights into the future performance of the company. They were hit hard in 2008 during the global financial crisis, and while the company has since returned the federal emergency aid money, the Federal Reserve reported that they failed stress tests in 2012 that would ensure the bank has enough capital to survive a similar scenario to the crisis in 2008. Results of future stress tests will have a direct effect on share prices.
- The government bailout caused shares to tank and branded Citigroup with a negative image. The stock is still undervalued, meaning that now is a good time to buy as analysts predict a continued recovery for the company.
- Interest rates are likely to increase after years of low rates. An environment in which interest rates are rising is a positive one for banks, who profit from higher interest rates.
Anyone who wants to trade Citigroup stock should carefully research the market conditions and the company’s recent and historical performance, and perform an analysis before trading.Trade Citigroup