NEW YORK, April 14 (Reuters) – Citigroup Inc’s (C.N) hiring of Andy Sieg, the incoming head of its wealth administration unit, underscores the lender’s ambitions within the enterprise in addition to the uphill climb it faces in gaining share in a aggressive market.
The 55-year-old govt, recognized for crisscrossing the nation to go to purchasers and monetary advisers, is tasked with revamping a unit the place income fell 2% to $7.4 billion final yr. That makes the enterprise lower than half the scale of Financial institution of America Corp’s (BAC.N) Merrill Wealth Administration arm, the $18-billion behemoth Sieg ran till he left final month.
“It’s a tremendous aggressive business,” stated Eric Compton, an fairness strategist at Morningstar. “It’s merely very onerous to take share. One other problem is that Citi has traditionally been undersized and a little bit of a laggard within the area…particularly within the wealth enterprise the place it’s all about present relationships.”
Citi is betting on Sieg’s connections.
“We’re clearly delighted that Andy is becoming a member of,” CEO Jane Fraser advised analysts on the financial institution’s first quarter earnings name on Friday, citing his observe document, management and information of monetary merchandise and digital adoption.
“We’ll actually be taking full benefit of his experience and expertise within the U.S.”
The hiring emerged as a spotlight of Citi’s post-earnings convention name, with a number of analysts asking in regards to the govt and the financial institution’s plans for wealth administration. The financial institution needs to construct higher relationships with rich individuals whose companies are already industrial purchasers, Fraser stated.
Sieg will intention to compete with firms which have spent years beefing up in wealth. Citi is recruiting new shopper advisers on the unit, CFO Mark Mason stated, including to the present stage of about 3,000.
The financial institution declined to remark past its executives’ remarks on the convention name. Sieg declined to remark.
Wall Road corporations cater to ultra-wealthy purchasers by offering companies like brokerage, mortgages, property and tax planning. These actions generate extra secure revenues than risky Wall Road operations, reminiscent of funding banking and buying and selling, that are strongly linked to financial exercise.
In some methods, Citigroup is enjoying catchup after promoting its previous wealth enterprise, Smith Barney, a decade in the past to Morgan Stanley, which then leaned closely into wealth administration.
That guess paid off – Morgan Stanley’s wealth unit, led by Andy Saperstein, introduced in document income final yr. And CEO James Gorman has set an bold aim of reaching $10 trillion in shopper belongings in a number of years.
Financial institution of America will report its earnings on Tuesday, adopted a day later by Morgan Stanley.
Two years in the past, Citigroup unified its varied wealth companies right into a single group led by Jim O’Donnell that included its non-public financial institution and private wealth division. Whereas Sieg is on required go away for contractual causes, O’Donnell will stay within the position after which develop into govt vice chairman. Sieg assumes his new position in September.
Citi’s wealth division oversees about $750 billion in shopper belongings, with a robust footprint in Asia, in contrast with Merrill’s $1.4 trillion in belongings underneath administration.
Sieg beforehand led 25,000 staff, nicknamed the “thundering herd,” after Merrill’s well-known bull emblem. He joined Merrill Lynch in 1992 and had been its president since 2017, with a four-year break throughout which he labored in Citi’s wealth group from till 2009.
Merrill’s income grew about 18% to $18.1 billion final yr, in contrast with $15.3 billion on the finish of 2017, in keeping with Financial institution of America filings.
Reporting by Lananh Nguyen and Saeed Azhar, modifying by Deepa Babington
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