Citi traders generate 78% increase in revenue as fixed income sales plummet

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Citigroup traders helped offset a decline in fixed income revenue in 2021 as investment banking fees hit record highs.

The US bank netted $6.7 billion in investment banking fees last year, up 35% and follows rival JPMorgan with a surge in trading revenue. Its M&A unit was the biggest riser, with revenue up 78% to $1.9 billion in the period, while equity capital markets fees rose 53% to 2.4 billions of dollars.

The bank’s overall profit of $22 billion was double 2020 figures and above analysts’ expectations of $21 billion. Revenue was $71.2 billion for the year, down 5% from a year earlier. Earnings were flattered by a loan loss release of $8.7 billion last year, compared to $9.8 billion set aside in 2020 to cover the impact of the Covid-19 pandemic.

READ Citi’s Gutiérrez-Orrantia plans to overthrow JPMorgan from Europe’s top spot in four years

“We continue to transform our bank with a focus on simplification and building a culture of excellence,” Chief Executive Jane Fraser said in a statement.

Citigroup installed Fraser as chief executive in March, the first woman to lead a major Wall Street bank, and she is in the midst of a ‘strategic refresh’ which has seen the bank close some non-essential retail units and embark on a new direction-driven wealth. It also faces a multi-year challenge to overhaul its risk and control functions at the behest of US regulators.

Citigroup has expanded its investment banking business, hiring dozens of chief executives in 2021 and 250 bankers, as well as creating a series of “supergroups” aimed at capturing major trends in technology, health and well-being.

Fraser said Citi would “continue to invest significantly in talent” within its investment bank and that there was “a very strong pipeline of deals ahead of us.”

The job market for bankers has become increasingly tight as deals have skyrocketed and burnout has increased at the junior level. Citigroup has just rolled out a new salary increase for its analysts in the United States, rising from $100,000 to $110,000 for those in their first year and $125,000 for their second and third years, according to a person familiar with the matter.

For those higher up the ladder, Citigroup is also changing its compensation. Fraser said in a call with an analyst that he would be more closely aligned with shareholder interests and that “senior executives” would receive 100% deferred stock bonuses – instead of a mix of stocks and shares. species – “in the geographical areas where we are authorized to do so”.

The bank is targeting rivals on Wall Street in the investment banking fee rankings, aiming for the top spot in Europe, the Middle East and Africa and the top three spots elsewhere, executives said. Financial News. Last year, it held on to fifth place in the fee rankings, according to data provider Dealogic.

Citigroup’s investment bank was bolstered by the blank check company frenzy in the first half of 2021. It advised on more initial public offerings from special purpose acquisition companies than any other bank, with 39.1 billion in transactions over the past 12 months, according to Dealogic.

READ Citigroup targets Wall Street rivals for top spots in investment banking expansion

Citigroup has also shaken up its equity trading unit under Fater Belbachir, who joined Barclays in 2020, in a bid to take market share from rivals. The unit’s revenue rose 25% to $4.5 billion last year. However, its much larger bond unit slipped 22% to $13.7 billion.

To contact the author of this story with comments or news, email Paul Clarke


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