Citigroup announced that they are planning to rebuild its equity unit soon. The move is seen as a bold action by the bank considering current economic situation and the "Volcker rule" regulation which limits banks investment in such funds.
However, the bank is very optimistic about the move and believe that this is the right time for them saying that Citi is planning to focus on growth now instead of solving the problem as reported by Reuters.
After some major changes to their technology and services, Citi aims to increase their revenue by offering services such as credit monitoring and trading algorithm to their client. Based on this new services, Citi will offer a product called "Optimus" for their United States and Europe client.
The product will help their client to manage their investment in a more organize way. Clients can choose the market based on size and market momentum of an investment and the new algorithm will sort out all option that offer similar quality to the client according to Business Insider.
As for now, Citi had hired 11 analysts for their investment unit and is slowly expanding other financing units in the bank. The bank also had hired two new members to run their electronic execution unit and prime brokerage.
It was reported that over the past 18 months, the equity trading had performed better than fixed income trading allowing the bank to make more profit in this sector.
In the past, Citi had generated $3 billion in equity trading while other banks in the same business generated more than $6 billion. This figure shows that the business have more to offer to Citi and they plan to more client by offering mid-size hedge fund.
Early August this year, SS&C Technologies Holding Inc. had announced that it had agreed to buy Citigroup hedge-fund services and private-equity fund services.
The acquisition had been agreed to be valued at $425 million. After that move, today Citigroup make an announcement to rebuild its equity unit.
After many problem that the bank have to face including a $180 million fine that they have to pay to investor Citi's new plan might be worth it as KBW analyst, Brian Kleinhanzl said "It's a recurring theme where they under invested and now they have to be reinvested".
The fine was made by Securities and Exchange Commission after they had given a misleading information regarding risk of their hedge fund services during the 2008-2009 crisis.
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