NEW YORK: Citigroup Inc’s top executives are weighing buying another bank, a move long considered inconceivable, as the firm wraps up years of work to address regulators’ criticisms.
Senior leaders of the New York-based firm have held preliminary discussions in recent months about trying to acquire a major US regional lender to dramatically ramp up deposits – a move that could provide more fuel for the Wall Street bank’s lending and trading operations, according to people familiar with the matter.
Some executives broached the possibility of a takeover during a meeting with US regulators this year, said the people, asking not to be identified describing private deliberations.
The authorities have signalled an openness to considering a concrete proposal.
The conversations are in early stages, and Citigroup remains under a pair of consent orders that require it to seek regulatory approval before attempting to make an acquisition. There’s no guarantee the firm will make a formal approach, one person said.
Some of the people noted that executives have also discussed pursuing a brokerage.
“The suggestion that Citigroup is planning to buy a regional bank, wealth brokerage – or any other financial services firm – is baseless speculation,” Citigroup said in a statement. “At this time, we are solely focused on growing organically by executing our strategy and completing our transformation,” it added.
The company’s stock was down about 4% as of 2:35pm last Friday in New York, after Bloomberg reported the internal talks.
Any multi-billion-dollar acquisition would mark the boldest step yet in Jane Fraser’s five-year tenure as chief executive officer, in which she has largely focused on simplifying the company, streamlining the workforce and improving returns.
Buying a regional bank would transform Citigroup, which almost collapsed during the 2008 financial crisis, by giving it branches across a swath of the country – more akin to JPMorgan Chase & Co and Bank of America Corp.
Some of the people said Citigroup could be interested in banks with around US$500bil in assets in the United States, a group that includes Charlotte, North Carolina’s Truist Financial Corp and Pittsburgh’s PNC Financial Services Group Inc, which each have market capitalisations over US$50bil.
A takeover of that magnitude would rank among the largest ever in US banking – potentially nearing Citi’s record US$70bil merger with Travelers Corp in 1998.
Executives have also expressed aspirations to buy a brokerage such as Stifel Financial Corp or Raymond James Financial Inc, the people said.
That would give the bank more access to wealthy Americans and their deposits while generating steady fees. — Bloomberg
