TIME: Almanac 1993/TIME Almanac 1993.iso/time/073090/0730207.000

Text File | 1992-08-28 | 3.8 KB | 83 lines

                                                                                BUSINESS, Page 50

Citicorp Fights to Rise Again



    While most U.S. banks are trimming their global ambitions,
America's biggest banking company is showing few signs of
retreat. The 178-year-old Citicorp, once ranked as the world's
largest bank in assets, lost that title to Japan's Dai-Ichi
Kangyo Bank in 1986 and slumped to No. 11 in FORTUNE's 1990
ratings. As it stumbled in one market after another, the firm
also lost some of its aura of invincibility, but it remains
stubbornly committed to maintaining an international presence.
Says John Reed, 51, the bank's youthful-looking chairman: "We
want to be global, and we want to be powerful."

    Citicorp is still the most wide-ranging bank in the world.
It has more overseas offices -- 2,200 -- in more countries --
89 -- than any other. It has more customer accounts -- 20
million worldwide -- including some 1 million in Asia and more
than 8 million in Europe. Fully 10% of all Belgian households
bank at Citicorp, as do 5% of those in West Germany and 3% in
Britain. Its 300-branch consumer bank in Dusseldorf primarily
serves factory workers. The firm's New York City-based Private
Bank caters to wealthy individuals, offering such services as
art-investment advice and estate planning. Citi's corporate
customers, says Reed, include "the Daimler-Benzes of the world,
the Toyotas of the world, the Exxons of the world."

    But the competition has stolen away some of Citicorp's
top-drawer clients. The bank was taken aback recently when it
lost Marriott Hotels, a longtime corporate customer, to a group
of Japanese rivals. Citi has also watched nervously as
competitors expanded their American beachheads. Britain's
Barclays Bank is enlarging its U.S. operations to target
multinational firms, many of them Citicorp customers. Of all
the rivals on Citi's turf, Reed considers Deutsche Bank "the
biggest and most formidable" because of its commanding presence
in Europe.

    Citicorp has only itself to blame for many of its problems.
It led the ill-fated charge by American financial institutions
into the London equities market in anticipation of the 1987
"Big Bang," which deregulated the British securities industry.
When the overcrowded market proved to be a disappointment, Citi
dissolved its London equities business, losing $65 million; 140
people lost their jobs. Citicorp was also the leader in Third
World lending. Today the bank has some $8.4 billion in
outstanding loans to less developed countries, or LDCs. Since
1987 Citi has been forced to write off or set aside reserves of
$4 billion to cover bad LDC loans. Last year its net earnings
plunged by 73%, to $498 million, partly because Brazil failed
to make a $250 million interest payment.

    Wall Street is even more concerned about the company's
problem loans at home. In the wake of the bankruptcy of
Canadian raider Robert Campeau in January, analysts began to
worry about Citicorp's high-risk loans for corporate buyouts.
Another problem area: nonperforming real estate loans, which
rose by 112% in 1989, to $1.3 billion.

    To compete abroad more effectively, Citi has spent an
estimated $1.3 billion on computers and telecommunications in
the past five years. Its advanced communications have enabled
the bank to remain the world's top dealer in foreign
currencies. The firm also operates the world's largest network
of automated teller machines and has introduced such
innovations as the touch-tone screen. The bank is currently
linking its 2,000 ATMs worldwide, so travelers in, say,
Singapore can tap their accounts in New York City or Buenos
Aires. With a reach like that, Citicorp will remain a major
player on the world banking stage.


By Thomas McCarroll/New York.