e. the Organizational Part

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THE ORGANIZATIONALPART

CITIBANK, N.A.,BANGLADESH


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CHAPTER 2: ORGANIZATION PART2.1. OVERVIEW OF CITIGROUPCitigroup Inc. is an American multinational financial services company based in New York City.

Citigroup was formed from one of the world's largest mergers in history by combining the

banking giant Citicorp and financial conglomerate Travellers Group on April 7, 1998.

Citigroup Inc. has the world's largest financial services network in the world, spanning 140

countries with approximately 16,000 offices worldwide. According to Forbes, Citigroup used to

be the largest company and bank in the world by total assets until the global financial crisis of

2008. Today it is ranked 24th in size compared to HSBC which now ranks as the largest

company and bank by assets in the world as of 2011. The company employs approximately

260,000 staff around the world, and holds over 200 million customer accounts in more than 140

countries. It is a primary dealer in US Treasury securities.

2.2. HISTORICAL BACKGROUNDThe history begins with the City Bank of New York, which was chartered by New York State on

June 16, 1812, with $2 million of capital. Serving a group of New York merchants, the bank

opened for business on September 14 of that year, and Samuel Osgood was elected as the first

President of the company. The company's name was changed to The National City Bank of New

York in 1865 after it joined the new U.S. national banking system, and it became the largest

American bank by 1895. The bank changed its name to The First National City Bank of New

York in 1955, which was shortened in 1962 to First National City Bank on the 150th anniversary

of the company's foundation. The company organically entered the leasing and credit card


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sectors and its introduction of US$ certificates of deposit in London marked the first new

negotiable instrument in market since 1888. Later to become MasterCard, the bank introduced its

First National City Charge Servicecredit cardpopularly known as the "Everything card"in

1967.

In 1976, under the leadership of CEO Walter B. Wriston, First National City Bank (and its

holding company First National City Corporation) was renamed as Citibank, N.A. (and Citicorp,

respectively). Shortly afterward, the bank launched the Citicard, which pioneered the use of 24-

hour ATMs. As the bank's expansion continued, the Narre Warren-Caroline Springs credit card

company was purchased in 1981. John S. Reed was elected 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.

In 1811 the U.S. Congress refused to renew the charter of the First Bank of the United States, the

countrys central bank, which had branches in such cities as New York. Thus on June 16, 1812,

some of the First Banks New York shareholders and other investors secured state incorporation

of the City Bank of New York, which was later established in the branch banking rooms of the

old First Bank. The bank grew a York City became the nations commercial and financial

capital, and in 1865 it was chartered under the National Bank Act and renamed the National City

Bank of New York. In 1897 it became the first large American bank to open a foreign

department, and in 1915 it became Americas leading international bank upon the purchase of

International Banking Corporation3, which had 21 overseas offices in 13 countries and

territories.


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Other mergers and acquisitions in the United States and overseas expanded the bank. Notably, in

1931 it acquired the Bank of America, NA. (another descendant of the First Bank of the United

States and no relation to the California-based bank), and in 1955 it merged with the First

National Bank of the City of New York (founded 1863). Upon this latter merger, the

consolidated company took the name of First National City Bank of New York. In 1967 the

holding company Citicorp was created to hold the stock of the First National City Bank of New

Yorkrenamed City Bank of New Yorkand to hold the stock of subsidiaries to be newly

acquired or split off from the bank, such as a finance company, a travelers cheek company, and

other related financial operations.

Founded in 1902 three major acquisitionsFidelity Savings and Loan Association of San

Francisco, First Federal Savings and Loan of Chicago, and New Biscayne Savings and Loan

Association of Floridawhich increased its assets by more than $8,500,000,000 and expanded

its interstate banking operations significantly. By the late 20th century Citicorp was the largest

American bank and one of the largest financial companies in the world, with about 3,000 branch

offices worldwide.

2.3. CREATION OF CITIGROUPAmid a global financial crisis and intense efforts to prepare for the introduction of the European

Union common currency (the Euro) and the computer problem caused by the year 2000 date

change, industry wide consolidation both within and across national borders continued to reshape

the financial services landscape in late 1990s. At the same time efforts were going on in the

United States and other countries to modernize laws governing the affiliation of banks with other

financial institutions.


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passage of comprehensive financial modernization legislation was widely expected to lead to

further consolidation of financial services in the US, particularly mergers involving commercial

banks and insurance firms.

2.4. DIVISIONS OF CITIGROUPSandy Weill, the Chairman and CEO of Citibank, has built Citigroup by bringing together the

best people. His strategy is simple-strengthen relationships and develop partnerships that create

value and expand our reach. His vision is for Citigroup to be the leading provider of financial

products and services across the globe. Citigroup is composed of four distinct business divisions.

They are

Citigroup Global Consumer Group

Citigroup Corporate and Investment Banking

Citigroup Global Investment Management

Citigroup Global Wealth Management

2.5. CITIBANK, N.A. BANGLADESHCitibank N.A. commenced in Bangladesh during 1987, with the opening of a representative

office. Leveraging on the strengths with respect of global network, expertise in financial services

and technology based delivery capabilities, Citibank NA. Bangladesh has been able to establish

as one of the largest overseas correspondents for the nationalized banks in Bangladesh. The bank

has also been a major player in trade finance an acted as financial adviser to key national

infrastructure projects.


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Citibank NA. opened its first full-service branch in Dhaka on June 24, 1995. With this new

branch, the bank aims to bring their customers the highest standard of international financial

services, backed by sophisticated technology and innovative products and services, customized

to suit the corporate needs. In course of time, the bank expanded is activities as well as

workforce.

A new full service branch was opened in Chittagong, the commercial capital of Bangladesh, on

June 18, 2000. The branch is now operating business in a commercial hub of the city side-by-

side most of its other counterparts.

Since its inception, the bank has only been serving institutional client groups in the country.

However, late in 2010, the bank announced its plans to introduce retail banking, initially in a

small scale, sometime in 2011.

Milestones in Bangladesh1987 Establishment of representative office

1995 Commencement of fully fledged bank Branch

2000 Opening of second Branch in Agrabad, Chittagong

2003 Opening of third Branch in Gulshan, Dhaka

2006 Opening of fourth Branch in Dhanmondi, Dhaka

2006 Opening of booth in Dhaka Export processing Zone(DEPZ)

2007 Opening of booth in Chittagong Export processing

Zone(CEPZ)

2008 Opening of booth in Adamjee Export processingZone(AEPZ)

2009 Opening of Uttara Service outlet


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2.6. MISSION STATEMENT AND KEY PRINCIPLES OF CITIOn January 7, 2011, Citi CEO Vikram Pandit communicated Citis mission and principles

globally as below:

Citiworks tirelessly to serve individuals, communities, institutions and nations. With 200 years

of experience meeting the worlds toughest challenges and seizing its greatest opportunities, we

strive to create the best outcomes for our clients and customers with financial solutions that are

simple, creative and responsible. An institution connecting over 1,000 cities, 160 countries and

millions of people, we are your global bank; we are Citi.

The four key principles that guide them as they perform this mission are:

1. Common PurposeOne team, with one goal: serving their clients and stakeholders

2. Responsible FinanceConduct that is transparent, prudent and dependable

3. IngenuityEnhancing their clients lives through innovation that harnesses the breadth and depth of

their information, global network, and world-class products.

4. LeadershipTalented people with the best training who thrive in a diverse meritocracy that demands

excellence, initiative and courage.


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2.7. KEY BUSINESS VALUES OF CITIBANK, N.A. The highest personal standards of integrity at all values Commitment to truth and fair dealing Hand-on management at all levels Openly esteemed commitment to quality and competence A minimum of bureaucracy Fast decisions and implementation Putting the Groups interests ahead of the individuals The appropriate delegation of authority with accountability Fair and objective employer A merit approach to recruitment/selection/promotion. A commitment to complying with the spirit and letter of all laws and regulations The promotion of good environment to the welfare and development of each local

community.


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2.8. ORGANIZATIONAL STRUCTURE

Figure 1: Organogram of Citibank, N.A., Bangladesh


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Before going into the details of department-by-department description of the organization, it

would be helpful to get an overview of how these departments are interlinked in twins of

dealing with the customers. The entire organization can be viewed as a three-tier entity

encompassing the customers: CEEMA stands for Central and Eastern Europe, Middle East

and Africa

In the first tier, closest to the customer, there are the Relationship Managers (RMs). They

specialize in specific customers or groups of customers, and they are the primary point of

contact between the bank and the customer. They usually belong to either of the two

departments, which specialize in managing relationships: the Corporate Banking Group

(CBG) and the Financial Institutions (Fl). The Treasury department also maintains direct

relationship with some specialized customers of treasury products.

In the second tier, there are product managers. They also interact with the customers, but in

doing so; they closely coordinate with the relationship managers. They may directly interact

with customers who are not designated to any specific RM or may interact with a different

level of managers when the customer is a corporate house. Often the RMs and the Product

Figure 2: Three-Tier View of the Organizational Structure


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Managers pay joint visits to customers or make joint presentations. While the RMs are

specialized in dealing with specific customers and know best what the needs of the customers

are, the product managers specialize in specific products and services and better know the

technical details of each product. Mostly the product managers belong to departments like

Cash Management and Treasury who deal with products of different kinds. A few product

managers also work in the operations department. It should be mentioned that for core

products like corporate loans or corresponding banking services, there are no separate

product managers, as the RMs themselves specialize in these products.

In the third tier there are the support departments: the Technology and Operations, the l4R,

Administration and Compliance, Credit Administration and the Financial Control

Unit (FCU). Technology and Operations is the largest department, headed by the SCOO

(Senior Country Operations Officer). Under this department there are Data Center, The Fl

operations, Treasury and Trade Operations, The Cash Management Operations and the

Internal Control Unit. Support departments usually dont directly interact with the customers

for marketing purposes; rather they provide all type of supports to the product managers and

the RMs. The organizational structure of Citibank is customized to utilize the best capabilities

of individuals. The relationships and personal network of the product managers and

relationship managers are used ill the optimized way to market different offerings. Again to

make use of individuals capabilities in multiple fields, it is often seen that the same person is

working in two different positions.


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2.9. STRUCTURE OF CITIBANK, N.A. BANGLADESHCitibanks operations encompass Corporate Banking, Global Transaction Services, Financial

Institutions and Sales and Trading (Treasury) under the Global Corporate and Investment

Banking (CIB) umbrella. Other departments, which can be termed as support, are Operations

and Technology, Credit Administration, Financial Control, Human Resource and

Compliance.

2.9a. Corporate BankThe corporate banking unit offers one-stop solutions combining lending and advisory

services, treasury, cash management, trade services and structures finance to meet the

specialized requirements of the customers. The three units within the corporate banking

group are Top Tier Local Corporate (TTLC), Global relationship Banking (GRB) and

Structured Finance. GRB managers deal with the multinational companies in Bangladesh

with whom Citibank has global relationship. TTLC managers deal with Bangladeshi

incorporated companies with a proven track record of growth. The industries of focus in this

segment are pharmaceuticals, electronics, distribution, textiles and apparels, consumer goods,

steel and high value commodities. Structured Finance offers Export and Agency Financing

(EAF), Infrastructure and Energy Financing (IEF) and Syndication facilities.

2.9b. Global Transaction Services GTS)This department is responsible for Citibanks global products and their sales in the

Bangladeshi market and comprises of

a. Cash Management services

b. CitiDirect Online Banking

c. Trade

d. Agency and Trust


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services. It also offers various electronic banking services enabling FI clients to perform large

domestic and international transactions with proper efficiency and security.

2.9d. Treasury Sales and TradingGlobal Finance Magazine has rated Citibank as the best foreign exchange bank in the world.

The banks worldwide expertise and reputation in foreign exchange and other treasury

activities are unparallel. Particularly its foreign exchange strength and expertise in the

emerging and G7 markets have been recognized and rewarded in many occasions. In the

same tradition, Citibank Bangladesh Treasury has been giving excellent and innovative

services to the clients since its inception in 1995. Their local and global strength in treasury

products enables them to offer the most competitive foreign exchange rates for Spot and

Forward transactions; Apart from competitive foreign exchange rates the bank has other

value added treasury services.

Citibank, N.A. Sales and trading desk offers the following treasury products to the customers.

1. Foreign Exchange Rate

Ready and spot rate Forward rates Currency swaps

2. Money Market and Fixed Income Rate

Overnight deposits Term deposits Discounted securities Repo/Reverse repo Purchase/sale of Government Treasury Bills and bonds


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Citibank is also a very active player in the countrys Swap Market. They are always wo rking

very closely with Central Bank and other regulatory organizations to offer their local and

international expertise for the development of new products and markets.

2.9e. Other DepartmentsOther support departments are not front end operation of the bank but they provide the real

backbone of offering the unique service that the bank claims to be its signature trait. Within

the support team most important is the operations department of the bank where the total

service level promised to customers are determined.

Another unique feature of this bank is its compliance department because it has to follow the

following job every day,

a. Abide by all applicable US laws in terms of trade services, banking relationship and

money laundering.

b. Abide by all Bangladesh bank rules because law of the land of operation is surpassing.

Compliance department strives to comply with all these applicable regulatory must dos

through its vigilance because any violation of any of the governing may result in cancellation

of banking license.


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2.10. MARKET COMPETITIONThe banking industry of Bangladesh is highly competitive. There are as high as 51 banks

operating in the country at the moment. However, because of the differences in target market

and variety of services, not all such banks are in direct competition with Citibank, N.A.

Bangladesh. The major foreign banks and some of the high performing local private banks

can be perceived as competitive threat.

The most formidable among the competitors is the combined Standard & Chartered (SCB)

and Standard & Chartered Grindlays (SCG) bank. In the recent years HSBC has come up

with quite aggressive strategies to increase their market share in Bangladesh. Citibank,

however, has so far not been very keen to penetrate the local market. Their absence in retail

banking, as yet, is a proof of that.

Though the competitive scenario may seem quite bleak at the first sight, considering the fact

that MNC banks largely cater to only 7% of the total banking sector, it can be said that there

is still opportunity for growth. The fact that combined SCB and SCG have a relatively large

branch network in the capital with higher singe borrower limit may be of significant concern

for Citi. Moreover, HSBC is positioned in both corporate and consumer market and is

growing steadily. The absence of consumer banking makes the cost of credit greater for

Citibank compared to its competitors. Nevertheless due to the strength in the global market,

high brand value and most sophisticated technology based product offerings; Citibank has

already secured a separate position in the banking arena of the country and enjoys certain

competitive advantages. With a plan of venturing into consumer banking, Citibank is now in

a fast growing position as far as Bangladesh is concerned.


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2.10a SWOT Analysis

2.11. CITIBANK ISSUES AND PROBLEMS OVER THE YEARS AND THESTRATEGIES USED TO COPE WITH THEMCiti reported losing $811 billion several days afterMerrill 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.

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

INTERNAL FACTORS EXTERNAL FACTORS

Strengths

Brand Image and reputation capital adequacy Adequate assets and liquidity Harmonious lender (bank) and

borrower (client) relationship

Experienced manpower in foreignexchange department

Online banking facilities Clients reliability on Citibanks

growth

Opportunities

Market yet to be saturated Market for innovative schemes Provision for setting competitive

interest rates

Weakness

Overworked employees No plans for future expansion from

regional office

Lack of promotional activities.

Threats

Changes in foreign exchange rate Changes in Govt. policy for business Intense competition in banking sector Competitors offer more attractive

services to the customers
http://en.wikipedia.org/wiki/Merrill_Lynchhttp://en.wikipedia.org/wiki/California_Attorney_Generalhttp://en.wikipedia.org/wiki/California_Attorney_Generalhttp://en.wikipedia.org/wiki/Merrill_Lynch


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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, 2009Citigroup 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.
http://en.wikipedia.org/wiki/Citigrouphttp://en.wikipedia.org/wiki/Citicorphttp://en.wikipedia.org/w/index.php?title=Citi_Holdings_Inc.&action=edit&redlink=1http://en.wikipedia.org/wiki/Citicorphttp://en.wikipedia.org/wiki/Citicorphttp://en.wikipedia.org/w/index.php?title=Citi_Holdings_Inc.&action=edit&redlink=1http://en.wikipedia.org/wiki/Citicorphttp://en.wikipedia.org/wiki/Citigroup

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