Casestudy: Governance Problems in Citigroup Japan

Docs en anglais | 10 pages | 14-04-2008 | Format : | Note : Non noté

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Résumé

Citigroup was created when Citicorp and Travelers Group merged together to generate the budget of 140 billion dollars and thus becoming one of the major organizations in financial services. The history of the company dates from the days of the City Bank of New York June 16, 1812, when Samuel Osgood, the first president of the company, established the first stepping stone for what would be one of the major financial companies in the world. After several years, the company changed its name from City Bank of New York to the National City Bank of New York in 1865.

The National City Bank of New York set up and evolved in the national banking system, and by the 1900s it became one of the largest American banks. Also, the National City Bank of New York was one of the first contributors to the Federal Reserve Bank and one of the first banks to establish an international branch in Buenos Aires by 1920s. At that time, revenues increased and lots of other branches developed across the United States and other countries. By the middle of the 1950s The National City Bank of New York had changed its name to the First National City Bank of New York and by 1962 the name was shortened to the First National City Bank.

In the beginning of the 1970s, the name was finally changed to Citibank and after new technologies were introduced in the 1980s such as credit cards, an alliance loomed on the horizon. On April 6, 1998 the merger between Citicorp and Travelers Group was announced to the world: a firm worth $140 billion generated $700 billion dollars in assets. There were also a lot of moves that were done in the stock market, with Travelers Group purchasing the entirety of Citicorp's shares for $70 billion dollars.

According to Forbes Global 2000 magazine, in March 2007, Citigroup was the largest banking company in the world with a capital of 2.1 trillion dollars. The company employed 332,000 workers around the world, and held over 200 million customer accounts in more than 100 countries by September 2007. After entering the Japanese market by 2004 there were a lot of challenges with Japanese Financial Services. The private banking of Citigroup was shut down because there were several issues like improper trading practices. There were also couple practices noticed when a client was misled about the investment risks, and in several cases there were overcharged customers for financial products. Citigroup Private Banking unit violated regulatory provisions, by promoting financial products that could only be sold by securities companies. By 2005, the banking license of Citigroup Japan was revoked.

Table of contents:

I) Introduction

II) Internal analysis

A. Strengths
B. Weaknesses

III) External analysis

A. Opportunities
B. Threats

IV) Recommendations et alternative solutions

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