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Citibank is a bank under Citigroup; the predecessor of it is Citibank of New York which was established in June 18th, 1812. They have been one of the largest banks in United States. Their Subsidiaries are found in 50 countries all over the world. During the October, 1998, the parent company of Citibank, Citigroup and traveler Group merged to form a new company called Citigroup.

In 2008, Subprime lending crisis broke out and globe financial system suffer a heart attack. Many people loaned from banks to buy houses and are unable to repay it on time, which caused the banks and companies cash flow problem. This vicious circle made these problems seriously, and really hard to deal with. The majority of U.S banks had closed down, and many companies broke their stocks quickly due to the financial crisis. Citigroup is one of them. After November 16th, 2008, Citigroup had lost assets nearly 2 trillion dollars and drop to the second largest commercial bank from head in United States. To November 21st, 2008, the Status of Citigroup had come down to fifth place in bank ranking. The clump of stock market caused customers, investor and creditors’ low confidence, the enormous influence Citigroup will have. As the largest U.S commercial bank, the extreme impact will be brought to all U.S financial system, if they bankrupt, the globe financial problem will worse and worse. So they set down sorts of means to save their company and to deal with this crisis.














*Quote:
 From: Wikipedia: Citigroup
http://en.wikipedia.org/wiki/Citicorp#Citicorp
 Analysis

First of all, let’s analyze the situation of Citigroup during financial crisis.


According to the Citigroup’s cash flow account, we can see that the basic problem that Citigroup face to is cash flow problem, especially in 2008.
The net income is nearly -27billion. Because of plenty of loans and less repayment, they have no cash to support business running in 2009. So this problem did not take a turn for better financial statement in 2009.

It is a chain reaction. More and more problem would be caused in the future.
Like these following things, which Citigroup has to face to?
 Customers, investors and creditors have lost confidence.
 The stock price fell quickly.
 More loan out, less money return, cash not enough.
 Weakened reputation.
 High unemployed rate.
But these problems are not hard to work out. The root causes are lack of capital and cash. Therefore if they solve these, another problem will be easier to deal with.



*Quote:
Citigroup income statement:
http://moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=C&lstStatement=Income&stmtView=Ann
In the end of 2008, they aimed at their plump to take measures.
They have announced that the group would reduce operating cost by restructuring to improve their profits and to be a part of the nationalization company. They took the following ways to deal with the financial crisis:

1. Business Tool:
SWOT:
Strengths Weakness
1. Small staffs scale will raise plenty of money in the future 1. Reduce salary will lose employees’ motivation.
2. Reduce the employees scale, will easy to control and good for efficiency. 2. Sale asset is only useful for short term; in a long term is not a good idea.
3. Holding enough capital to running. 3. Maybe lose some power after being public.
4. They have enough money is easy to restore customers’ confidence. 4.Cut down people will cost a lot of money in a short term.
Opportunity Threaten
1. Good opportunity to reform the business structure which threatens business and think about the bad asset. 1. Weakened reputation and lose credit.
2. Forces on the oversea companies, especially developing country, like China and some countries who suffered a mild influence during financial crisis in order to get more customer base. 2. Many company lay off so they have no income to pay back money which cause business has not enough money to run and to restore.
3. Stock market rewarming. 3. Business will have less customers and less investment.

2. Assistance from government:
Citigroup in United States has a long history, and it is one of the most giant commercial banks in U.S. They not only can bring many benefits but also lots of jobs for the local place. So imagine the consequence, if they are closed down during the financial crisis, the financial problem will be worse.

Just because of their vital position, the United States government cannot ignore their problems. Ultimately after negotiations, allowed the U.S government to use $21 billion to purchase the Citigroup stock which account for 36% in Citigroup. While their lots of stock are hold by government, it also shows that Citigroup become part of the nationalization. The reason of United States become part of the nationalization is to redeem the customers and investors’ confidence. Although Citigroup’s cash is more abundant than others, due to the economic crisis caused the Citigroup's broken stock which really discouraged investors, customers, etc. Ultimately, the investors and customers withdraw investment. That made Citigroup in trouble. So they have to take measures to restore customers’ confidence. In the short term, the Government's rescue at this time bring them a great effect, it is good for both Citigroup and Citigroup’s clients. The U.S government provide them $20 billion stock can safe Citigroup's investors and customers, and enhance their confidence. It is really important for Citigroup to get out of plight. But on the other side, it is not a good idea if all financial systems are controlled by government. The financial market must win profit, so the plenty of investment will do. The government has to pay a lot of money and more attention and strong force to help them to run well. Enough money government should have or have to raise, which mean the tax will be high that will cause civilest cannot save more money, and probable made the crisis worse or cause another problem.
3. Citigroup self-help:
Citigroup has to control expense by following measures:
First is employees’ salary: follow the regulations (government made), without their permission every quarter Citigroup cannot share profit exceed 1 cent per share. Reportedly, Citigroup is not the only one who used this way to reduce costs, many banks also did this.
A new employee in Citigroup generally can cost many salaries per year. And Citigroup has more than 30 million employees all over the world, so it is easy to know that how large the Citigroup’s expending on salary. But under the influence of the financial crisis, Citigroup did not has enough money to support these largely cost. Thus, they control the cost by reducing salary, although it is very bad for developing employees’ motivation. If this action can help them to raise fund to solute crisis, for employees maybe it is a good thing.

In addition, if they also paid a considerable salary by using funds which are given by government to support business, it will be a extremely irresponsible behavior.

Second way to reduce expending is layoff. Citigroup has cut down nearly 50 thousand of employees. The CEO said that they were planning to lay off more people recently. If they did this, the great benefits will be brought. The reduce expending on staff wages to saving money. And also less staffs will have better efficiently so that can made business earn money in a shorter time. But another problem will be broke out. They cut down so many people, the high unemployed rate will bring to the local place. More people will have no job, so they have none incomes to pay back the loan.

Thirdly is to sale fixed asset. Citigroup did not only control internal expending, but also think about the external. Selling fixed asset is a genera way to raise money quickly in a short term. They decided to reform parts of assets, and would not sell any core asset. But it does not mean that they will hold all the assets. Last year, they sell a branch in Japan; it is called Nikko – A United States Trust Bank.




















 *Quote:
 Government Investment (From: Wikipedia)
http://en.wikipedia.org/wiki/Citigroup
 People loss confidence (From: Reuters)
http://www.reuters.com/article/idUSN0532847720090305
 From: Wikinvest: Stock Citigroup
http://www.wikinvest.com/stock/Citigroup_%28C%29
 From: Mahalo: Citigroup lay off
http://www.mahalo.com/citigroup-layoffs\
 From: Forbes: Citi Raises Cash With Nikko Sale
http://www.forbes.com/2009/05/01/nikko-citi-smfg-markets-equity-japan.html
 Conclusion
Citigroup use two main steps to deal with financial crisis. One is gain helps from government. The U.S government invested Citigroup a plenty of money and bought a lot of stocks to help them restore company. Another way is reform the internal business’ structure; they aimed to raise money to keep the normal running. These two means are good for business raise capital in a short term, but not suitable for a long term, it will become threaten. Anyway, it is a good idea to reinstatement current situation of both Citigroup and global financial crisis.





 Evaluation
According to Citigroup’s 2009 annual report, it shows us Citigroup tend to be better. In 2009, Citigroup made profits about 16 billion dollar. It is good news for us. Anyway we see Citigroup made a correct decision to work out financial crisis problem.

I think they became nationalized by U.S government is only a stopgap. You know in United States is almost occupied by private company, and also its policy is not same like China or European countries. Citigroup belonged to government is temporary. After financial crisis, I believe that their main ways to run business is also like private company’s method, although they also called nationalization. The government basic reason to purchase Citigroup is to help them cross difficult barriers; they are not aim to control the power of Citigroup.

And their self help is also a stopgap, when the financial crisis passed, and they can continue to loan, invest, and sale stock they will be what they like in the past years, but they need long time to finish reinstatement.

Now Citigroup tend to better and better, we can say that they are survival in 2008 financial crisis. In their annual report, they have a really good outlook in the future, and recently they have to spend many years to raise money.