Transformations, Achievements, and Current Status
Citibank, one of the largest and oldest financial institutions in the world, is a part of Citigroup, established in 1812. Throughout its history, the bank has played a significant role in global economic and financial development. Today, it ranks as the third-largest financial services and banking company in the United States, following Bank of America and J.P. Morgan. This article explores the history, transformation, and achievements of Citibank.
Table of Contents
Founding History of Citibank
In 1811, George Clinton, then Vice President of the United States, proposed establishing a new bank for New York merchants and recommended a board of directors composed of his colleagues and local merchants. After receiving approval, the City Bank of New York was founded on June 16, 1812, by Samuel Osborne. Although Clinton passed away three months later due to a heart attack, the New York City Bank continued to operate.
During its first year, the bank faced the War of 1812 between Britain and the United States. To protect financial resources in case of a British occupation of New York, an emergency committee was formed. These measures earned the trust of the U.S. government, and Citibank became the government’s depository bank.
In 1820, John Jacob Astor, a wealthy merchant, joined Citibank and became one of its most important clients. The bank’s first building was located at 38 Wall Street and underwent renovations in the 1840s.
In 1865, with Citibank’s significant growth and development, the name was changed from “City Bank of New York” to “National City Bank of New York.” This renaming reflected the bank’s expansion and brought it into the U.S. national banking system, significantly enhancing its financial reputation and importance in the national market.
From its founding to the present day, Citibank has achieved a prominent position in global financial markets through innovation and the expansion of its services. The bank offers retail banking services in 160 countries worldwide, operating 1,400 branches—half of which are located in the United States, with most branches concentrated in New York, Chicago, Los Angeles, San Francisco, Washington, D.C., and Miami.
Prominent Leaders in Citibank’s History
The first customers and managers of Citibank were prominent New York merchants. One of its earliest experienced banking managers was Gorham Worth, who joined the bank in 1825. Worth had worked as a treasurer at various American banks for years before becoming Citibank’s general manager two decades later, earning respect as a cornerstone of the bank’s operations.
Another influential figure in Citibank’s history was Moses Taylor, who joined the bank during the financial crisis of 1837. His contributions to expanding Citibank’s customer base eventually led to his appointment as the bank’s general manager, playing a critical role in the bank’s growth.
Civil War and Citibank’s International Expansion
Citibank, the eighth-oldest bank in New York, performed well during Wall Street’s economic crises by extending loans to merchants and implementing strong liquidity policies. Under Moses Taylor’s leadership, the bank implemented a policy requiring companies to store their primary assets with Citibank in exchange for short-term loans.
During the American Civil War (1861-1865), Citibank supported the government financially, lending $50 million to Abraham Lincoln. Following the enactment of the National Currency Act in 1863, the bank’s name was officially changed to the National City Bank of New York, significantly boosting its credibility.
In 1866, Moses Taylor invested in the Atlantic telegraph line, enhancing communication between New York and major European cities like London and Berlin. By setting up a new foreign exchange unit, he facilitated Citibank’s global operations. Taylor expanded the bank’s customer base and positioned Citibank as a major supporter of the U.S. railroad industry until his death in 1882.
Through mergers with IBC Bank and the opening of its first international branches in China and other parts of Asia, Citibank continued its global expansion. Its new headquarters at 55 Wall Street, fully renovated in 1908, symbolized the bank’s growth and prestige.
In 1911, Citibank founded the National City Company, investing in the U.S. and abroad. With the onset of World War I, the bank expanded into Latin America and provided significant financial support to the Allies.
Modernizing Citibank’s Infrastructure
At the turn of the 20th century, Citibank’s increasing assets and international operations highlighted the need for structural optimization. Initial efforts included improving working conditions, offering merit-based salary increases, and conducting periodic evaluations.
In 1915, Citibank acquired a controlling stake in IBC Bank, gaining access to European networks. This acquisition facilitated the establishment of new branches in Genoa, Brussels, Antwerp, Barcelona, and Madrid.
During the 1920s, Citibank implemented capital-raising programs for foreign companies in the U.S. and issued bonds for major Australian and Chilean corporations. The bank also expanded into retail banking by acquiring several active banks in New York.
Despite challenges during the Great Depression of the 1930s, Citibank’s international branches played a critical role in generating revenue. During this time, the Paris branch was relocated to a smaller city, and many employees were sent to war fronts. To address workforce shortages, Citibank began hiring and training female employees in collaboration with IBM. By the end of 1942, women accounted for 43% of Citibank’s workforce.
After World War II, Citibank launched significant advertising campaigns and increased investments in transportation industries, fostering further growth in the late 1940s.
Structural Evolution of Credit Cards
At the beginning of the 20th century’s second decade, Citibank expanded its recruitment activities, implementing special programs for war survivors. The bank also developed its presence in new regions, including Africa and West Asia, incorporating countries such as Egypt, Libya, Lebanon, and Saudi Arabia into its network.
During the Cold War, Citibank chose London as its international hub to maintain dominance in European markets and managed the exchange of dollars outside the United States from there.
In the 1950s, as many large corporations relocated to Midtown Manhattan, Citibank decided to purchase and equip a new building at 399 Park Avenue. The building was equipped with the most modern communication and banking management systems of its time.
In the 1970s, Citibank focused on personal banking and introduced Citicard bank cards. One of the major projects during this decade was the introduction of its credit card, the “Everything Card,” which became the first credit card with extensive functionalities, enabling customers to access a wide range of services.
The bank also launched practical ATMs, offering customers 24/7 access to their accounts. John Reid, one of the bank’s key executives, advocated for having at least two ATMs at every location—an idea that proved effective in subsequent years.
Merger with Travelers Insurance
In 1998, Citibank’s Chairman John Reid and Stanford I. Weill, CEO of Travelers Company, agreed to a merger valued at approximately $140 billion. The goal was to expand services and leverage Travelers’ reputation and experience in the credit and insurance sectors. This led to the establishment of Citigroup, officially announced on April 6, 1998.
This merger introduced Citibank to the insurance sector and marked the beginning of significant global growth for the newly formed Citigroup in the early 21st century. One of the first notable steps was the acquisition of Handlowy Bank in Poland in 2001.
However, the partnership between Citibank and Travelers was short-lived. In 2002, due to negative impacts from events such as the 9/11 attacks on Travelers’ stock value and revenue, Citibank decided to exit this sector. Consequently, many of Travelers’ insurance services were discontinued, with only limited life insurance services retained by Citibank.
Current Status and Achievements of Citibank
Recovery and Transformation Post-2008 Financial Crisis
Following the 2008 financial crisis, Citibank stabilized its financial situation and settled its debts with government support. Vikram Pandit, Citibank’s CEO at the time, reduced his salary to $1 to demonstrate his commitment to rebuilding the bank. Citibank emerged stronger and more optimized in structure after the crisis.
Supporting Startups and Underserved Regions
In the 2010s, Citibank actively supported startups and underserved regions. Through its “Communities at Work” program, Citibank invested $200 million in financial institutions in deprived areas. This initiative resulted in the creation of 41,000 jobs and provided loans to vulnerable entrepreneurs.
Innovation in Banking
Citibank introduced smart banking branches, offering modern and digital services to its customers. These branches achieved remarkable success, particularly in Japan, elevating Citibank’s rank from 57th to 1st in the country. By April 2011, 48 smart banking branches had been established across 11 countries.
Expansion into Islamic Banking
With the establishment of its first Islamic banking branch in Bahrain, Citibank began offering services adhering to Islamic principles. These services expanded to countries such as Malaysia, Indonesia, Pakistan, and Turkey, reflecting Citibank’s efforts to meet the cultural and religious needs of its customers.
Streamlining Operations
In 2014, Citibank scaled down its operations in certain international markets, discontinuing personal banking services in 11 countries. These measures were aimed at focusing on key markets and optimizing organizational structure.
Current Achievements
In 2018, Citibank recorded revenues nearing $73 billion, employing approximately 204,000 people. The Citibank brand ranked 45th in Interbrand’s list of the most valuable global brands. Michael Corbat, the current CEO of Citibank, receives an annual salary of about $24 million, making him one of the highest-paid individuals in the financial industry.
