"Life is fragile," Jamie Forese, Citi’s head of markets, mused. We were sitting in his office at Citi’s New York investment banking headquarters. It was the eighth anniversary of the September 11 World Trade Center bombings. I thought of Jamie’s words when the 61-year-old legendary banker Bruce Wasserstein, chairman and chief executive of Lazard Ltd, died unexpectedly in mid-October. Wasserstein, like Larry Fink, the chief executive of BlackRock, was a Credit Suisse First Boston refugee who went on to found his own firm, become a billionaire and leave an indelible mark on the financial firmament.
In the 21st century, 60 is the new 40. To die at 61 is to die young. After all, omnipotent old-age pensioners such as Warren Buffett, Felix Rohatyn and Paul Volcker still prance around the world stage. Dick Fuld, the former Lehman Brothers chief executive, is rumoured to be setting up his own advisory firm at the tender age of 63. It is sometimes said that no one on his deathbed wishes he had spent more time in the office. Many bankers confuse working with living. They should remember Wasserstein’s untimely death. I acknowledge that there is a coterie of committed bankers who passionately love what they do. Although I never met him, I imagine Wasserstein was in that mould. I was intrigued to see that despite his devotion to doing deals, the corporate matchmaker managed to make four matches of his own. In 2009, Wasserstein remarried for the fourth time. Nicknamed "Bid ’em up Bruce", he may have been a bruiser in business but he was clearly a romantic at heart.
This autumn, I was privileged to spend several hours with some of Citi’s top bankers: Jamie Forese, Ray McGuire and Paul Simpson. I was interested to find out how the firm was faring one year after it stumbled into the taxpayers’ arms. Today, the US government owns 34% of the bank. Citi’s institutional clients group is run by John Havens. Heavyweight Havens joined the bank in 2007 with the current chief executive, Vikram Pandit, when Citi purchased their hedge fund, Old Lane, at a ridiculously high valuation. Old Lane was closed a year later. Citi’s institutional clients group includes the global transaction services, global banking and global markets areas as well as the private bank and alternative investment group.
Wall Street is an intricate labyrinth: the kings and princes all know each other and often worked together. Ray McGuire, Citi’s head of global banking, was a protégé of Wasserstein. McGuire started his career in the mergers and acquisitions group of First Boston and then followed Wasserstein and Joe Perella when they left to start Wasserstein, Perella & Co. McGuire has an outstanding résumé. He was born on the wrong side of the tracks but has risen far in the over-privileged world of finance. "I am a statistical aberration," he said with a wry grin. As you would imagine, McGuire was upbeat on the Citi story, citing the breadth and depth of Citi’s global presence. "There is no other franchise which can talk to you about 109 countries," he insisted. This year, Citi has advised Kraft on its possible acquisition of Cadbury, Volkswagen on its merger with Porsche, and Affiliated Computer Services on its sale to Xerox.
McGuire, who joined Citi from Morgan Stanley in 2005, was appointed to his present role this summer. Indeed, some whisper that his elevation prompted the popular head of European banking, Tom King, to resign. King has now joined Barclays Capital. Undeterred, McGuire presses on: he is integrating the corporate and investment banking relationship management functions and streamlining coverage into eight main industry groups. This year to date, according to Dealogic, Citi is ranked number four in the global M&A league table. The challenge for McGuire is that, while Citi has stabilized in the past few months, it has not regained its previous blue-chip status. The strong hand of the state is not helpful when it comes to recruitment and retention of bankers. It might also affect the way clients perceive the firm. According to Bloomberg, JPMorgan’s advisory revenues in the first nine months of 2009 were $1.26 billion whereas Citi’s comparable revenues came in at $543 million. A Citi spokesperson pointed out that Citi does not include liability management assignments in its advisory fee total whereas certain competitors do.
Francesco Vanni d’Archirafi, head of the global transaction services (GTS) division, was not in New York when I visited. So I met with his direct report, Paul Simpson, who is Citi’s global head of treasury and trade solutions. Paul assured me that the turmoil of the past year had not affected the growth of his business. He talked about the crisis being a once in a lifetime opportunity for his division. "I was tired and overworked but I learnt a lot and spent a lot of time with clients," he said. As the world trembled, clients looked for a competent partner that could ensure that the nuts and bolts of their business continued to hold. Functions such as corporate credit cards, cash management, payments, receivables and trade finance might not have the glamour of roller-coaster investment banking but they are essential to any big organization. The GTS business is driven by and reliant on technology. I was intrigued to learn that the technology budget across the division was $1 billion for 2009. In fact, Vanni d’Archirafi often describes his area as "a technology company with a banking licence attached". In the third quarter of 2009, GTS had revenues of $2.5 billion and income of $939 million. "It’s a fabulous business for the firm," a mole murmured. "Frankly, there’s no true global competitor in this area." Citi was voted the best global cash management bank in Euromoney’s 2009 annual poll.
