Banking giant Citigroup is expected to announce the merger of
two ofmajor business units as it gears up to increase cross-selling
opportunities.
According to the Financial Times the joining up of the bank's
investment and corporate banking operations could be announced
internally this week.
Jitz Desai, director at financial services think-tank JWG-IT,
said Citigroup's investment and corporate business units have
disparate IT operations. "They have operations all over the place
but I would expect some IT, such as networks, to already be
shared," he added.
He said the two operations are "distinct functions" and that
linking them together would help them reduce risks. "The regulators
expect banks to ensure they can get their funding correct."
In 2004 Citigroup created a global banking group but major parts
of corporate and investment banking remained separate.
The firm recently announced
52,000 job cuts.Citigroup CEO Vikram Pandit revealed last month
that the US bank would to cut its workforce across all businesses
and geographies in the near future, with IT and operations expected
to bear the brunt of the cuts.
This would represent 20% of its total employees. Pandit told the
FT earlier this year that it was feasible for the bank to take 10%,
15% or 20% off its cost base, especially in IT and operations.
A Citigroup spokeswoman told Computer Weekly last month that
half of the job cuts would come from the sale of business units.
The company had earlier announced 18,000 job cuts when it
sold its Global Services unit in India to Tata Consultancy
Services for £300m.
Deeper technology integration will allow investment banking and
corporate banking to improve customer relationships, saidto Bob
McDowall, analyst at TowerGroup. He said this trend wouldincrease
in the banking sector. "They are trying to get the technology
integration deeper with the emphasis on customer relationships
rather than deals." They can do this if the investment banking
business has an insight into corporate customers' businesses.
McDowallsaid investment banks across the world will embark on
similar strategies in 2009 as they become more focused on advice
rather than deals.