ECONOMICS PROJECT

Name: Umang Agrawal

STD: 12th B
Submitted to: Ms. Hetal Phillips
 INTRODUCTION
Citibank (stylized as citibank) is the consumer division of financial
services multinational Citigroup. Citibank was founded in 1812 as the City Bank of
New York, and later became First National City Bank of New York. The bank has
2,649 branches in 19 countries, including 723 branches in the United States and
1,494 branches in Mexico operated by its subsidiary Banamex. The U.S. branches
are concentrated in six metropolitan areas: New York City, Chicago, Los
Angeles, San Francisco, Washington, D.C., and Miami. In 2016, the United States
accounted for 70% of revenue and Mexico accounted for 13% of revenue. Aside
from the U.S. and Mexico, most of the company's branches are
in Poland, Russia, India and the United Arab Emirates.
As a result of the financial crisis of 2007–2008 and huge losses in the value of its
subprime mortgage assets, Citigroup, the parent of Citibank, received a bailout in
the form of an investment from the U.S. Treasury. On November 23, 2008, in
addition to an initial investment of $25 billion, a further $20 billion was invested in
the company along with guarantees for risky assets of $306 billion The guarantees
were issued at a time markets were not confident Citi had enough liquidity to cover
loses from those investments. Eventually the Citi shares the Treasury took over in
return for the guarantees it issued were booked as net profit for the treasury as Citi
had enough liquidity and guarantees did not have to be used. By 2010, Citibank
had repaid the loans from the Treasury in full, including interest, resulting in a net
profit for the U.S. federal government.
 HISTORY
The City Bank of New York was founded on June 16, 1812. The first president of
the City Bank was the statesman and retired Colonel, Samuel Osgood. In August
1813, with Osgood's death, William Few became President of the Bank, staying
until 1817, followed by Peter Stagg (1817–1825), Thomas Smith (1825–
1827), Isaac Wright (1827–1832), and Thomas Bloodgood (1832–1843).
Ownership and management of the bank was taken over by Moses Taylor in 1837,
a protégé of John Jacob Astor and one of the giants of the business world in the
19th century. During Taylor's ascendancy, the bank functioned largely as a treasury
and finance center for Taylor's own extensive business empire. Later presidents of
the bank included Gorham Worth (1843–1856), Moses Taylor himself (1856–
1882), Taylor's son-in-law Patrick Pyne, and James Stillman (1891–1909).
In 1831 City Bank was the site of one of America's first bank heists when two
thieves made off with tens of thousands of dollars' worth of bank notes, and
398 gold doubloons.
The bank also has the distinguishable history of financing war bonds for the war of
1812, serving as a founding member of the financial clearing house in New York
(1853), underwriting the Union, during the American Civil War with $50 million
in war bonds, opens the first foreign exchange department of any bank (1897), and
received a $5 million deposit to be given to Spain for the US acquisition of
the Philippines (1899). In 1865, the bank joined the national banking system of the
United States under the National Bank Act and became The National City Bank of
New York. By 1868, it was one of the largest banks in the United States, by 1893 it
was the largest bank in New York, and following year it was the largest within the
United States. In later years it would help finance the Panama Canal (1904) and
Stillman, then the bank's chairman, would intervene, along with J. P.
Morgan and George Fisher Baker, in the Panic of 1907.
When the Federal Reserve Act allowed it, National City Bank became the first
U.S. national bank to open an overseas banking office when it opened a branch
in Buenos Aires, Argentina, in 1914. Many of Citi's present international offices
are older; offices in London, Shanghai, Calcutta, and elsewhere were opened in
1901 and 1902 by the International Banking Corporation (IBC), a company
chartered to conduct banking business outside the U.S., which was forbidden to
U.S. national banks. In 1918, IBC became a wholly owned subsidiary and was
subsequently merged into the bank. The same year, the bank evacuated all of its
employees from Moscow and Petrograd as the Russian Civil War had begun, but
also established a branch in Puerto Rico. By 1919, the bank had become the first
U.S. bank to have $1 billion in assets.
As of March 9, 1921, there were four national banks in New York City operating
branch offices: Catham and Phoenix National, the Mechanics and Metals National,
the Irving National, and National City Bank.
Charles E. Mitchell, also called "Sunshine" Charlie Mitchell, was elected president
in 1921. In 1929, he was made chairman, a position he held until 1933. Under
Mitchell, the bank expanded rapidly and by 1930 had 100 branches in 23 countries
outside the United States. The policies pursued by the bank under Mitchell's
leadership are seen by many people as one of the prime causes of the stock market
crash of 1929, which led ultimately to the Great Depression.
In 1933, a Senate committee, the Pecora Commission, investigated Mitchell for his
part in tens of millions of dollars in losses, excessive pay, and tax avoidance, later
leading to his resignation. Senator Carter Glass said of him: "Mitchell, more than
any 50 men, is responsible for this stock crash."
On December 24, 1927, its headquarters in Buenos Aires, Argentina, were blown-
up by the Italian anarchist Severino Di Giovanni, in the frame of the international
campaign supporting Sacco and Vanzetti.
In 1940 and 1941, branches in Germany and Japan closed. In 1945, the bank
handled $5.6 billion in Treasury securities for War and Victory Loan drives for the
U.S. government.
In 1952, James Stillman Rockefeller was elected president and then chairman in
1959, serving until 1967. Stillman was a direct descendant of the Rockefeller
family through the William Rockefeller (the brother of John D.) branch. In 1960,
his second cousin, David Rockefeller, became president of Chase Manhattan Bank,
National City's long-time New York rival for dominance in the banking industry in
the United States.
Following its merger with the First National Bank in 1955, the bank changed its
name to The First National City Bank of New York, then shortened it to First
National City Bank in 1962. It is also worth noting that the bank began recruiting
at Harvard Business School in 1957, arranged the financing of the 1958 Hollywood
film, South Pacific, and had its branches in Cuba nationalized in 1959 by the
new socialist government, and has its first African-American director in
1969, Franklin A. Thomas.
The company organically entered the leasing and credit card sectors, and its
introduction of US dollar denominated certificates of deposit in London marked
the first new negotiable instrument in the market since 1888. Later to become part
of MasterCard, the bank introduced its First National City Charge Service credit
card—popularly known as the "Everything Card"—in 1967.
In 1967, Walter B. Wriston became chairman and chief executive officer of the
bank.

Citibank logo used from 1976 until 2001 in the United States, and internationally
until 2002, designed by Dan Friedman from Anspach Grossman Portugal of New
York.
In 1967, First National City Bank reorganized as a one-bank holding company,
First National City Corporation, or "Citicorp" for short. However, the bank had
been nicknamed "Citibank" since the 1860s, when City Bank of New York adopted
it as an eight-letter wire code address. "Citicorp" became the holding company's
formal name in 1974, and in 1976, First National City Bank was renamed Citibank,
N.A. The name change also helped to avoid confusion in Ohio with Cleveland-
based National City Corp., though the banks never had any significant overlapping
areas except for Citi credit cards issued in National City territory. In addition, at
the time of the name change to Citicorp, in 1968, National City of Ohio was mostly
a Cleveland-area bank and had not gone on its acquisition spree that would occur
in the 1990s and 2000s. Any possible name confusion had Citi not changed its
name from National City eventually became completely moot when PNC Financial
Services acquired National City in 2008 during the subprime mortgage crisis.
In 1987, the bank set aside $3 billion in reserves for loan losses in Brazil and
other developing countries. In 1990, the bank established a subsidiary in Poland. In
1994, it became the world's biggest card issuer.
 SERVICES
PROVIDED BY
BANK
1. CREDIT CARD
In the 1960s the bank entered into the credit card business. In 1965, First National
City Bank bought Carte Blanche from Hilton Hotels. Three years later, the bank
(under pressure from the U.S. government) sold this division. By 1968, the
company created its own credit card. The card, known as "The Everything Card",
was promoted as a kind of East Coast version of the BankAmericard. By 1969,
First National City Bank decided that the Everything Card was too costly to
promote as an independent brand and joined Master Charge (now MasterCard).
Citibank unsuccessfully tried again from 1977 to 1987 to create a separate credit
card brand, the Choice Card.
John S. Reed was selected 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, the largest issuer
of credit cards and charge cards in the world, and expand its global reach to over
90 countries.
As the bank's expansion continued, the Narre Warren-Caroline Springs credit card
company was purchased in 1981. In 1981, Citibank chartered a South
Dakota subsidiary to take advantage of new laws that raised the state's maximum
permissible interest rate on loans to 25% (then the highest in the nation). In many
other states, usury laws prevented banks from charging interest that aligned with
the extremely high costs of lending money in the late 1970s and early 1980s,
making consumer lending unprofitable. Currently, there is no maximum interest
rate or usury restriction under South Dakota law when a written agreement is
formed. As of 2013, Citibank employed 2,900 people in Sioux Falls, South Dakota
and contributed to the state holding more bank assets than any other state.
In 2005, Federated Department Stores (now Macy's, Inc.), sold its consumer credit
portfolio to Citigroup, which reissued its cards under the name Department Stores
National Bank (DSNB).
In 2013, Citibank purchased the credit card portfolio of Best Buy from Capital
One.
On April 1, 2016, Citigroup became the exclusive issuer of Costco's branded credit
cards.
The bank's private-label credit card division, Citi Retail Services, issues store-
issued credit cards for such companies as: American Airlines, Best
Buy, ConocoPhillips, Costco, ExxonMobil, The Home Depot, Sears, Shell
Oil, Staples Inc. and until January 2018, Hilton Hotels & Resorts.

2. Automatic teller machines

In the 1970s, Citibank was one of the first U.S. banks to introduce automatic teller
machines (ATMs), which gave customers 24-hour access to cash. In April 2006,
the firm signed a deal with 7-Eleven to offer Citibank customers free access to
ATMs in more than 5,500 convenience stores in the United States. The 7-Eleven
deal ended in 2017.

3. Online banking
The Citibank.com domain name was registered in 1991, and initially used only for
email and other internet interactions. As early as 1982, Citibank pioneered online
access to accounts using 300-baud dial-up only. At first, access was through
proprietary software distributed on a 5.25-inch floppy disk. Following the creation
of the World Wide Web, the bank offered browser-based access as well.
 EXPANSION

In 2002, Citigroup, the parent of Citibank, acquired Golden State Bancorp

and its California Federal Bank, which was one-third owned by Ronald O.
Perelman, for $5.8 billion.
In 1999, Citibank was sued for improperly charging late fees on its credit
cards.
In August 2004, Citigroup entered the Texas market with the purchase of
First American Bank of Bryan, Texas. The deal established the firm's retail
banking presence in Texas, giving Citibank over 100 branches, $3.5 billion
in assets and approximately 120,000 customers in the state.
In 2006, the bank entered the Philadelphia market, opening 23 branches in
the metropolitan area. In 2013, Citibank closed these locations for
"efficiency-driven" reasons.
In 2006, the company announced a naming rights sponsorship deal for the
new stadium of New York Mets, Citi Field, which opened in 2009. The deal
reportedly required payments by Citi of $20 million per year for 20 years.
On October 19, 2011, Citigroup, the parent of Citibank, agreed to a $285
million civil fraud penalty after the U.S. Securities and Exchange
Commission accused the company of betting against risky mortgage-
related investments that it sold to its clients.
In 2014, Citigroup announced it would exit retail banking in 11 markets,
primarily in Europe and Central America. In September 2014, it exited the
Texas market with the sale of 41 branches to BB&T. In September 2015,
the bank announced that it would close its 17 branches in Massachusetts
and end sponsorship of a theater in Boston.
In 2015, the bank was ordered to pay $770 million in relief to borrowers for
illegal credit card practices. The Consumer Financial Protection
Bureau said that about 7 million customer accounts were affected by
Citibank's "deceptive marketing" practices, which included misrepresenting
costs and fees and charging customers for services they did not receive.[70]
On March 1, 2017, an article in The Economic Times of India stated that
Citibank may close its 44 branches in India, as digital transactions made
them less necessary. The articles wrote that Citibank was “India’s most
profitable foreign lender”.
On March 20, 2017, The Guardian reported that hundreds of banks had
helped launder KGB-related funds out of Russia, as uncovered by an
investigation named Russian Laundromat. Citibank was listed among the
American banks that were named as having handled the laundered funds,
with banks in the US processing around $63.7 million between 2010 and
2014. Citibank was listed as having processed $37 million of that amount,
with others including Bank of America, which processed $14 million. as the
bank “handled $113.1 million” in Laundromat cash.