Citigroup bets on ex-BofA exec Andy Sieg’s connections to redesign wealth unit By way of Reuters

© Reuters. FILE PHOTO: The emblem for Citibank is noticed at the buying and selling ground on the New York Inventory Trade (NYSE) in Big apple, New York Town, U.S., August 3, 2021. REUTERS/Andrew Kelly

By way of Lananh Nguyen and Saeed Azhar

NEW YORK (Reuters) – Citigroup Inc (NYSE:)’s hiring of Andy Sieg, the incoming head of its wealth control unit, underscores the lender’s ambitions within the industry in addition to the uphill climb it faces in gaining proportion in a aggressive marketplace.

The 55-year-old govt, recognized for crisscrossing the rustic to seek advice from shoppers and fiscal advisers, is tasked with revamping a unit the place income fell 2% to $7.4 billion final 12 months. That makes the industry lower than part the scale of Financial institution of The united states Corp (NYSE:)’s Merrill Wealth Control arm, the $18-billion behemoth Sieg ran till he left final month.

“This is a tremendous aggressive business,” stated Eric Compton, an fairness strategist at Morningstar. “It’s merely very laborious to take proportion. Any other problem is that Citi has traditionally been undersized and somewhat of a laggard within the house…particularly within the wealth industry the place it’s all about present relationships.”

Citi is betting on Sieg’s connections.

“We are clearly thrilled that Andy is becoming a member of,” CEO Jane Fraser informed analysts at the financial institution’s first quarter revenue name on Friday, bringing up his observe document, management and information of economic merchandise and virtual adoption.

“We’re going to indisputably be taking complete benefit of his experience and revel in within the U.S.”

The hiring emerged as a spotlight of Citi’s post-earnings convention name, with a number of analysts asking in regards to the govt and the financial institution’s plans for wealth control. The financial institution needs to construct higher relationships with well to do folks whose companies are already business shoppers, Fraser stated. 

Sieg will purpose to compete with corporations that experience spent years beefing up in wealth. Citi is recruiting new shopper advisers on the unit, CFO Mark Mason stated, including to the present stage of about 3,000.

The financial institution declined to remark past its executives’ remarks at the convention name. Sieg declined to remark.

Wall Side road companies cater to ultra-wealthy shoppers by means of offering products and services like brokerage, mortgages, property and tax making plans. The ones actions generate extra strong revenues than unstable Wall Side road operations, reminiscent of funding banking and buying and selling, which might be strongly connected to financial job.

In many ways, Citigroup is taking part in catchup after promoting its previous wealth industry, Smith Barney, a decade in the past to Morgan Stanley (NYSE:), which then leaned closely into wealth control.

That wager paid off – Morgan Stanley’s wealth unit, led by means of Andy Saperstein, introduced in document income final 12 months. And CEO James Gorman has set an bold purpose of achieving $10 trillion in shopper property in different years.

Financial institution of The united states will file its revenue on Tuesday, adopted an afternoon later by means of Morgan Stanley.

Two years in the past, Citigroup unified its quite a lot of wealth companies right into a unmarried group led by means of Jim O’Donnell that integrated its non-public financial institution and private wealth department. Whilst Sieg is on required depart for contractual causes, O’Donnell will stay within the function after which develop into govt vice president. Sieg assumes his new function in September.

Citi’s wealth department oversees about $750 billion in shopper property, with a robust footprint in Asia, in comparison with Merrill’s $1.4 trillion in property below control.

Sieg prior to now led 25,000 staff, nicknamed the “thundering herd,” after Merrill’s well-known bull emblem. He joined Merrill Lynch in 1992 and have been its president since 2017, with a four-year damage all the way through which he labored in Citi’s wealth workforce from till 2009.

Merrill’s income grew about 18% to $18.1 billion final 12 months, in comparison with $15.3 billion on the finish of 2017, in step with Financial institution of The united states filings.