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A

Merchant Bank Report

On

“Citigroup Global Markets India Private”

Submitted By

Varma Pranjal Bajrang

Roll No: 13011114

Specialization: Finance

Course: Merchant Banking & Financial Services (306)

Semester III

Academic year: AY 2014-15

BRACT’s

Vishwakarma Institute of Management (An ISO 9001-2008 Certified Institute)

(Approved by AICTE-New Delhi, Recognized by Government of Maharashtra and Permanently Affiliated to University of Pune)

MBA – Programme – Rated as “MH-A” by CRISIL

Recipient of the 19th Dewang Mehta B School Award for the Best B School with Academic Inputs in Marketing

Rewarded as “Second Best Professional Institute in Urban Area Category” by the University of Pune

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A) ABOUT MERCHANT BANKER:-

Citi's Institutional Clients Group is comprised of diverse, talented professionals globally located

in more than 100 countries and territories, collectively representing an unparalleled international network of financial skills and capabilities serving targeted clients. Our clients are top corporations, financial institutions and governments in countries around the world and our

mission is to help them achieve their goals. We do so by providing strategic, financing and operational insights and executing tailored product/service solutions, both across our borders and

domestically. The ICG responds to clients' changing needs through its long-established relationship coverage approach that provides client solutions utilizing all of Citi's relevant capabilities, including the broadest possible access to financial markets globally. No other

institution can match our combination of global insights, client relationship management services, geographic reach and local and cross-border product expertise.

The ICG is organized into five groups: Capital Markets Origination, Corporate and Investment

Banking, Markets and Securities Services, Treasury and Trade Solutions and the Citi Private Bank.

Citigroup Inc. or Citi is an American multinational banking and financial services corporation headquartered in Manhattan, New York City. Citigroup was formed from one of the world's

largest mergers in history by combining the banking giant Citicorp and financial conglomerate Travelers Group in October 1998 (announced on April 7, 1998 As of 2008 it was

the third largest bank holding company in the US by assets. Its largest shareholders include funds from the Middle East and Singapore At its height until the global financial crisis of 2008 Citigroup was the largest company and bank in the world by total assets with 357,000

employees. In 2007, Citigroup was one of the primary dealers in US Treasury securities. Citigroup had the world's largest financial services network, spanning 140

countries with approximately 16,000 offices worldwide and holds over 200 million customer accounts in more than 140 countries

Citigroup suffered huge losses during the global financial crisis of 2008 and was rescued in November 2008 in a massive stimulus package by the U.S. government. On February 27, 2009,

Citigroup announced that the US government would take a 36% equity stake in the company by converting US$25 billion in emergency aid into common stock with a US Treasury credit line of

$45 billion to prevent the bankruptcy of the largest bank in the world at the time. The government guaranteed losses on more than $300 billion troubled assets and injected $20 billion immediately into the company. In exchange, the salary of the CEO was $1 per year and the

highest salary of employees was restricted to $500,000 in cash and any amount above $500,000 had to be paid with restricted stock that could not be sold until the emergency government aid

was repaid in full. The US government also gained control of half the seats in the Board of Directors, and the senior management was subjected to removal by the US government if there were poor performance. By December 2009, the US government stake was reduced to 27%

majority stake from a 36% majority stake after Citigroup sold $21 billion of common shares and equity in the largest single share sale in US history, surpassing Bank of America's $19 billion

share sale one month prior. Eventually by December 2010, Citigroup repaid the emergency aid in full and the US government received an additional $12 billion profit in selling its shares. US

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Government restrictions on pay and oversight of the senior management were removed after the US government sold its remaining 27% stake as of December 2010.

As of 2009, Citigroup was one of the Big Four banks in the United States, along with Bank of

America, JP Morgan Chase and Wells Fargo.

As of June 2012, year of Citi's 200th anniversary, Citigroup had built up an enormous cash reserve in the wake of the financial crisis with $420 billion in surplus liquid cash and

government securities. As of Q1 2012, Citi had tier 1 capital ratio of 12.4%, making one of the best-capitalized financial institutions in the world after billions of dollars in losses from the

financial crisis. This was a result of selling more than $500 billion of its special assets placed in Citi Holdings, which were guaranteed from losses by the US Treasury while under federal majority ownership. A special IRS tax exception given to Citi allowed the US Treasury to sell its

shares at a profit, while it still owned Citigroup shares, which eventually netted $12 billion. According to Treasury spokeswoman Nayyera Haq, "This (IRS tax) rule was designed to stop

corporate raiders from using loss corporations to evade taxes, and was never intended to address the unprecedented situation where the government owned shares in banks. And it was certainly not written to prevent the government from selling its shares for a profit." In 2012, Citigroup

ranked 20th in size under the Fortune 500 list. In comparison, JPMorgan Chase, which ranked 16th, was the largest bank in US.

History

Citi is a leading global bank, providing individuals, corporations and institutions with a broad

range of financial products and services, including consumer banking and credit, corporate and

investment banking, securities brokerage, transaction services and wealth management. Citi has

approximately 200 million customer accounts and does business in more than 160 countries and

jurisdictions.

Citi's principles - common purpose, responsible finance, ingenuity and leadership - are an

integral part of our history, and are a foundation for our future. Since 1812, our central mission

has been to support economic progress. For two centuries, we have applied our passion for

innovation to help our clients advance from ambition to achievement - to connect the world for

our clients and to connect our clients to the world.

The bank's core strengths - facilitating international trade and capital flows, helping consumers

pursue opportunities in the world's top 150 cities and helping companies build their businesses in

the US, throughout the developed world and in the high-growth emerging markets - are all

aligned with the trends that are redefining the global economy.

Citi works tirelessly to serve individuals, communities, institutions and nations. With 200 years

of experience to help meet some of the world’s toughest challenges and seizing great

opportunities, we strive to help create the best outcomes for our clients and customers with

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financial strategies. Reaching our 200th anniversary is a milestone that few institutio ns can

match.

Citigroup was formed on October 9, 1998, following the $140 billion merger of Citicorp and Travelers Group to create the world's largest financial services organization. The history of

the company is, thus, divided into the workings of several firms that over time amalgamated into Citicorp, a multinational banking corporation operating in more than 100 countries; or Travelers

Group, whose businesses covered credit services, consumer finance, brokerage, and insurance. As such, the company history dates back to the founding of: the City Bank of New York (later Citibank) in 1812; Bank Handlowy in 1870; Smith Barney in 1873, Banamex in

1884; Salomon Brothers in 1910.

City Bank of New York was chartered by New York State on June 16, 1812, with $2 million of capital. Serving a group of New York merchants, the bank opened for business on September 14

of that year, and Samuel Osgood was elected as the first President of the company. The company's name was changed to The National City Bank of New York in 1865 after it joined the new U.S. national banking system, and it became the largest American bank by 1895. It became

the first contributor to the Federal Reserve Bank of New York in 1913, and the following year it inaugurated the first overseas branch of a U.S. bank in Buenos Aires, although the bank had,

since the mid-19th century, been active in plantation economies, such as the Cuban sugar industry. The 1918 purchase of U.S. overseas bank International Banking Corporation helped it become the first American bank to surpass $1 billion in assets, and it became the largest

commercial bank in the world in 1929. As it grew, the bank became a leading innovator in financial services, becoming the first major U.S. bank to offer compound

interest on savings (1921); unsecured personal loans (1928); customer checking accounts (1936) and the negotiable certificate of deposit (1961).

The bank changed its name to The First National City Bank of New York in 1955, which was shortened in 1962 to First National City Bank on the 150th anniversary of the company's

foundation. The company organically entered the leasing and credit card sectors, and its introduction of U.S. dollar–denominated certificates of deposit in London marked the first new

negotiable instrument in market since 1888. The bank introduced its First National City Charge Service credit card—popularly known as the "Everything card" and later to become MasterCard—in 1967.

In 1976, under the leadership of CEO Walter B. Wriston, First National City Bank (and its holding company First National City Corporation) was renamed as Citibank, N.A. (and Citicorp, respectively). Shortly afterward, the bank launched the Citi card, which pioneered the use of 24-

hour ATMs. John S. Reed was elected CEO in 1984, and Citi became a founding member of the CHAPS clearing house in London. Under his leadership, the next 14 years would see

Citibank become the largest bank in the United States and the largest issuer of credit cards and charge cards in the world, and expand its global reach to over 90 countries.

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Travelers Group:-

Travelers Group, at the time of merger, was a diverse group of financial concerns that had been brought together under CEO Sandy Weill. Its roots came from Commercial Credit, a subsidiary

of Control Data Corporation that was taken private by Weill in November 1986 after taking charge of the company earlier that year. Two years later, Weill mastered the buyout

of Primerica—a conglomerate that had already bought life insurer A L Williams as well as stock broker Smith Barney. The new company took the Primerica name, and employed a "cross-selling" strategy such that each of the entities within the parent company aimed to sell each

other's services. Its non-financial businesses were spun-off.

In September 1992, Travelers Insurance, which had suffered from poor real estate investments and sustained significant losses in the aftermath of Hurricane Andrew, formed a

strategic alliance with Primerica that would lead to its amalgamation into a single company in December 1993. With the acquisition, the group became Travelers Inc. Property & casualty and

life & annuities underwriting capabilities were added to the business. Meanwhile, the distinctive Travelers red umbrella logo, which was also acquired in the deal, was applied to all the businesses within the newly named organization. During this period, Travelers

acquired Shearson Lehman a retail brokerage and asset management firm that was headed by Weill until 1985 and merged it with Smith Barney.

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B) VARIOUS SERVICES PROVIDED BY MERCHANT BANKER

1. Credit cards

2. consumer banking 3. corporate banking

4. investment banking 5. global wealth management 6. financial analysis

7. private equity

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C) DETAILED EXPLANATION OF EACH SERVICE

1) Credit cards:-

Accept Credit Cards

Citi Merchant Services enables you to accept most major credit and debit cards2 and provides a

Full Service Solution for processing and settling Visa®, MasterCard

®, American Express

®, and

Discover® network transactions on one statement with one funding.

Accept Debit Cards

Your customers can also pay with PIN-secured or signature debit cards using the same terminal.

Plus, you can accept payments online or via phone, even when payment cards aren't physically

presented.

2) consumer banking:-

With branch locations concentrated in urban centers, and nearly three-quarters of 3,730 branches in emerging markets, Citibank's footprint is unique among financial institutions.

Citibank serves a full range of consumer banking needs, including checking and savings accounts, loans, wealth management advice and small business services. In 2011, Citi joined with the Small Business Administration to announce a three-year commitment to lend $24 billion

to America's small businesses, and by the end of 2013, Citi had surpassed that commitment by $2.6 billion.

Citi's Banamex franchise serves 21 million clients in Mexico, where the bank has a leading position in retail banking, consumer credit, corporate and investment banking, securities brokerage, transaction services, wealth management, bank insurance, and mutual and pension

funds. In 2013, Global Finance magazine recognized Banamex as Best Bank, Best Consumer Internet Bank Best Corporate/Institutional Internet Bank in Mexico. For the Latin America

region, Banamex was honored as Best Online Treasury Services.

In 2013, Citibank optimized its branch footprint, further concentrating its presence in urban centers. Citi opened branches in key U.S. cities, including Chicago, Miami, New York and

Washington, D.C., and its first flagship on the West Coast in Los Angeles. Citi Smart Banking branches, designed around technology that offers the finest customer experience in the industry,

were opened in many cities around the world, including Rio de Janeiro and Warsaw. Citi also was one of the first two global banks approved to establish a presence in the Shanghai Free Trade Zone in China.

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With the vast majority of client transactions occurring outside of branches, Citi pioneered a new distribution model in which a branch is just one touch point in a network that includes flagships,

traditional branches, kiosks, multi- functional ATMs and digital channels. In Malaysia, the Philippines and Singapore, Citi marked the global launch of Citibank Express next-generation

ATM that allows clients to access nearly all the services available at a traditional branch.

In Asia Pacific, Citi and AIA Group Limited announced the largest bank assurance agreement ever signed. The agreement provides the opportunity to offer life insurance products in one of the

world's fastest-growing wealth management regions where affluent clients increasingly seek financial protection for their family and assets.

3) corporate banking:-

Financial services specifically offered to corporations, such as cash

management, financing, underwriting, and issuing of stocks, bonds, or other instruments. Financial institutions often maintain specific divisions for handling the needs of corporate clients, separate from consumer or retail banking activities for individual accounts.

The corporate banking segment of banks typically serves a diverse range of clients, ranging from

small to mid-sized local businesses with a few millions in revenues to large conglomerates with billions in sales and offices across the country. Commercial banks offer the following products

and services to corporations and other financial institutions:

Loans and other credit products – this is typically the biggest area of business within

corporate banking, and as noted earlier, one of the biggest sources of profit and risk for a

bank.

Treasury and cash management services – used by companies for managing their working

capital and currency conversion requirements.

Equipment lending – commercial banks structure customized loans and leases for a range

of equipment used by companies in diverse sectors such as manufacturing, transportation

and information technology.

Commercial real estate – services offered by banks in this area include real asset analysis,

portfolio evaluation, debt and equity structuring.

Trade finance – involves letters of credit, bill collection, and factoring.

Employer services – services such as payroll and group retirement plans are typically

offered by specialized affiliates of a bank.

Through their investment banking arms, commercial banks also offer related services to their

corporate clients, such as asset management and securities underwriters.

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4) investment banking:-

Corporate finance is the traditional aspect of investment banks which also involves helping customers raise funds in capital markets and giving advice on mergers and acquisitions (M&A).

This may involve subscribing investors to a security issuance, coordinating with bidders, or negotiating with a merger target. Another term for the investment banking division is corporate finance, and its advisory group is often termed "mergers and acquisitions". A pitch book of

financial information is generated to market the bank to a potential M&A client; if the pitch is successful, the bank arranges the deal for the client. The investment banking division (IBD) is

generally divided into industry coverage and product coverage groups. Industry coverage groups focus on a specific industry – such as healthcare, public finance (governments), FIG (financial institutions group), industrials, TMT (technology, media, and telecommunication) – and

maintains relationships with corporations within the industry to bring in business for the bank. Product coverage groups focus on financial products – such as mergers and acquisitions,

leveraged finance, public finance, asset finance and leasing, structured finance, restructuring, equity, and high-grade debt – and generally work and collaborate with industry groups on the more intricate and specialized needs of a client.

5) global wealth management:-

Citibank has experienced rapid growth, largely due to our unique distribution model and success in capturing mass affluent clients. Clients are provided with a broad range of deposit, investment,

insurance and treasury products, amongst others. A relationship banking service also enables us to service clients' banking and investment needs through a single point of contact operating out

of Citi gold branches in Sydney, Brisbane, Perth and Melbourne.

Wealth management provides access to investment and financial advisory services, including mutual funds, managed portfolios, stocks, bonds, insurance products and retirement solutions. Citi gold service provides a personalized level of assistance, unique benefits and global

capabilities to clients worldwide. In 2013, The Asset magazine named Citi Best Wealth Manager in Asia, and Private Banker International named Citi gold Private Client as Outstanding Wealth

Management Service for the Affluent. Bank Investment Consultant named 10 Citi gold Financial Advisors among the top advisors of 2013.

6) financial analysis:-

Financial analysis (also referred to as financial statement analysis or accounting

analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability

of a business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make use of information

taken from financial statements and other reports. These reports are usually presented to top

management as one of their bases in making business decisions.

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Continue or discontinue its main operation or part of its business;

Make or purchase certain materials in the manufacture of its product;

Acquire or rent/lease certain machineries and equipment in the production of its goods;

Issue stocks or negotiate for a bank loan to increase its working capital;

Make decisions regarding investing or lending capital;

Other decisions that allow management to make an informed selection on various

alternatives in the conduct of its business.

7) private equity:-

Private equity is a source of investment capital from high net worth individuals and institutions

for the purpose of investing and acquiring equity ownership in companies. Partners at private-

equity firms raise funds and manage these monies to yield favorable returns for their shareholder

clients, typically with an investment horizon between four and seven years.

These funds can be used in purchasing shares of private companies, or in public companies that

eventually become delisted from public stock exchanges under go-private deals. The minimum

amount of capital required for investors can vary depending on the firm and fund raised. Some

funds have a $250,000 minimum investment requirement; others can require millions of dollars.

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D) LIST OF ISSUES UNDER EACH SERVICES:-

1. Online account:-

(Kimberly of Gainesville, FL on July 23, 2014)

On July 15th, 2014, I decided to open a new checking and savings account with Citibank. The application process was pretty easy, at least until it came time to send in the supporting

documents in order for my account to be opened. I was required to send in a photocopy of my driver's license and the account holder signature card, so, I faxed these items over to them. I got a

call 2 days later telling me that my documents had been received, but the photocopy of my drivers license had been rejected because the picture was too dark. I was annoyed because I know that I had enhanced the picture to make it as light as possible. The nearest copy company is

a full 45 minutes away from my home, so having to go back out to send this fax was extremely inconvenient!

Fast forward to almost 1 week later and 5 trips back and forth to the print company that's pretty

far from my home, and they are still saying the same crap! "Sorry ma'am, the photocopy is still coming out too dark, so we had to reject it." What the hell?!?!? Even the copy company said that they faxed it in high resolution and in the lightest it could go!

This morning, I finally spoke to a rep that actually helped me, she notified me that she would

overnight me a prepaid overnight envelope for me to just send a physical photocopy to them. (The best solution I've been given by any one of those incompetent reps since all of this crap

started. She's the reason I'm giving this bank a star at all.) The only downside is that even after they receive the overnight physical copy of my license, I'll still have to wait a full 48 hours before it is processed and my account is opened! So it'll be damned near 2 weeks it took them to

open my account, all because their faulty fax machines had too dark of a toner to decipher any photocopy sent to them (they didn't say that's what happened, but I have to assume that

something is wrong with their fax machines).

I'm just pissed that by the time my account is fully opened, it would have been 2 weeks since I first signed up for it, all over a silly photocopy. They could have suggested sending me the prepaid overnight envelope way earlier, instead of allowing me to drive 45 minutes two ways 5

times to re-fax the damn photocopy! (By the way, I told them that the drive was long and very inconvenient, so they could have suggested the overnight mailing a long time ago.)

2) Financial analysis:-

(Helen of Willoughby, Other on July 8, 2014)

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I have been a Citibank customer for about the last 6 years. I have been paying an interest rate of 15.45% (lured in by a 7.9% Balance Transfer) on a Ready Credit Loan. Recently they invited me

to increase my credit limit. I considered the repayments of the interest rate offered and decided I could afford it. Now with this month's statement I receive a letter stating that the interest rate will

be going up to 19.49% up by 4% and will be retrospective. I would never have taken on extra debt if I had known of this impending increase. 15.45% is a great return for the bank already putting it up to 19.46% is just greed. When I rang, I was basically told that in the terms and

conditions, they can increase the interest rate to whatever they want whenever they want! Beware potential Citibank customers, this bank lures you in and before you know it you have

one of the worst credit deals on offer. I have complained to The Financial Ombudsman (Australia) and will be contacting the media. People must be warned about these glorified loan sharks. Can they jack up interest rates that much?

3) Deposits:-

(Jason of Jakarta, Other on Oct. 15, 2014)

Worst bank I have ever used. I opened my Citibank account in May and made an initial deposit of $100 to open the checking account. After a month of opening the account I had to leave the country for business travel. While away I tried to set up an external account, to make transfers

from my other bank account into the Citibank account. I thought it had been approved, since the initial small deposits were received then verified. Though when I went to make my first external

transfer into my Citibank account it was someone rejected, even though I had enough money to cover the transfers. They said my account had been closed due to inactivity. The account was not even a few months old and I made the transfer before the account was supposedly closed.

When I called customer service they said they couldn't do anything and my transfer never

happened. I mentioned that I got emails verifying the transfers and payments from Citibank to my other account. The manager on the phone said that that wasn't Citibank who made the

transfer and the message never existed. How is that possible when I'm looking at it in my account and on my email?

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E) LEARNINGS:- What is the role of bank and how it work.

What are the products and services provided by Citibank?

What is the quality of the services provided by Citibank?

Discuss the resent challenges faced by the bank

How they offer the customized solution to the clients