Citi seeks its next act in wealth management

Tue May 29, 2012 11:49am EDT
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By Joseph A. Giannone

NEW YORK (Reuters) - As Citigroup (C.N: Quote) prepares to exit its ownership in brokerage giant Smith Barney, the bank is on a hiring spree to build what it hopes will become a significant U.S. wealth management business centered around its high-end Citigold account.

The bank plans to hire 300 more personal bankers and brokers in the next two years, with a goal of reaching about 800 by 2014, Citigold Wealth Management President Venu Krishnamurthy told Reuters.

"We have the capability for organic growth combined with a platform of high-end products and solutions," he said in a recent interview. "It's like picking from the world's biggest box of Lego pieces."

To support this expansion, Citibank on Tuesday hired veteran Merrill Lynch brokerage executive John Cummings as chief operating officer of Citigold Wealth Management, according to an internal memo obtained by Reuters. The bank also hired Frank Consalo from PNC Financial Services (PNC.N: Quote) where he oversaw more than 300 advisers, as head of field management for Citi's broader personal wealth management business.

Citigold is the bank's latest effort to sell more personal investment services through its retail branches. It is a key strategy since Citi agreed to sell its brokerage unit, Smith Barney, to Morgan Stanley (MS.N: Quote) in 2009, needing to raise cash to offset losses from the financial crisis.

Until Citi sells its remaining interests in the venture, it has agreed not to compete in retail wealth management. After that, Citigold's U.S. ranks could grow to thousands, on par with Citigold in Asia, where the bank has about 2,000 advisers.

Big banks are promoting elite banking and investment management to attract customers who are affluent but not rich enough for private banking. These programs say they offer more sophisticated advice and drive traffic to branches, generating a new stream of revenue for the banks.

Rival JPMorgan Chase & Co (JPM.N: Quote) is also expanding. Its Chase Private Client group had 366 private client offices at the end of March, with a goal of 1,000 offices with 550 bankers and advisers over the next year. JPMorgan estimates the business eventually could generate $1 billion a year in pretax income.   Continued...

A Citibank sign is seen outside of a bank outlet in New York March 4, 2009. REUTERS/Lucas Jackson