With many competitors cutting back,
) plans to increase the workforce of its European credit sales and
trading team by about 5% in an effort to capture market share,
according to a Bloomberg report.
Citigroup, which currently has a strength of 100 people in the
team for the credit trading business in Europe, intends to make
more hires in the upcoming two to four quarters.
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Amidst the Eurozone crisis and the need to build up capital levels
to satisfy regulator's stricter capital norms, European banks are
shedding their businesses, in particular the non-core and riskier
ones. Companies such as
Royal Bank of Scotland Group Plc.
Deutsche Bank AG
) are making numerous layoffs.
This retreat by the European banks is opening up opportunities for
U.S. counterparts like Citi and
Wells Fargo & Co.
), who are capitalizing on the deleveraging activities. With the
European banks scaling back their business, making cost cuts and
reducing headcounts, there is an increased availability of an
expert workforce and Citi wants to avail the opportunity to expand
its business in the region.
While Citi is maintaining a flat global headcount, it is
simultaneously strengthening its franchisee in Europe and has been
increasing its headcount in the region for the past few years.
In addition to making job cuts, a number of European firms are
making asset sales. One of Citi's peers, Wells Fargo, is active on
this front and has been making a number of strategic asset
acquisitions from the European counterparts.
Notably, Citi has already implemented strategic reengineering
efforts in its business and has been shedding non-core assets over
the past few years. Strengthening its core franchisee is a priority
and the trimming of assets frees up resources to be deployed in its
We believe that the strategic expansion of its European credit
trading business will offer opportunities to augment its top line.
In addition, the company is also expanding its business in China
through joint securities ventures and has commenced issuing its
own-branded credit card. Such expansion efforts should enhance its
global network, boost its revenue base and strengthen its market
Citi currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. Considering its fundamentals, we have a
long term Neutral recommendation on the stock.