Long term underinvestment has left Citigroup flagging in the competitive retail banking market

20 February 2007

Citigroup, whose 972 US outlets have been criticised for appearing unappealing and outdated, have about one sixth of the number of branches as market leaders Bank of America and also trail behind Fifth Third Bancorp who have 1,156.

Analysts blame Citigroup's situation on previous chief executive Sanford Weill, who opted to focus on insurance and investment banking at the expense of retail banking. In the meantime, the bank's competitors were expanding their involvement in the sector to compete with local banks.

However, Charles O. Prince, who succeeded Weill at Citigroup, hopes that a plan to offer additional banking products and services via the company's Smith Barney brokerages will arrest the bank's disappointing performance.

Latterly, Citigroup's problems have lead to slower rises in share prices relative to its rivals. The company's shares rose 15 per cent between the close of 2003 and 2006, compared to a rise of 32 per cent for JP Morgan and a 33 per cent improvement for Bank of America.

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