Citigroup (C) in Restructuring Mode, Partners With Netwealth
Moving ahead with its restructuring moves, banking giant Citigroup’s C Australian subsidiary is gearing up to partner with Netwealth, Australia's fastest growing platform. The partnership will provide the bank with International Custody, Global and Domestic Equities Execution and Fund Administration.
Per the partnership terms, Netwealth, having access to Citi's global platform 'Execution to Custody' (E2C), will become the first Australian wealth platform of getting such benefits. Notably, through E2C, institutions are served with global execution, settlement and custody services on a single portal, eliminating operational inefficiencies and risks related to various providers. Moreover, clients are served with enhanced quality execution and services.
"Netwealth has an outstanding reputation in the local market and we are thrilled to provide them with a high-tech solution that will reduce manual workload, allowing them to concentrate their resources towards clients and technology as opposed to operational flow," said Citi Australia head of Equities Daniel Young.
Notably, Citigroup’s move follows Netwealth’s recent launch of a series of funds within its Global Specialist Series products with Magellan Financial Group.
"Citi is particularly well placed to facilitate Netwealth's growth plans, whether that is combining our leading Markets and Securities Services products together like we have with E2C, or providing a full suite of Fund Administration services that will support their new Global Specialist Series offering. Our international access is unparalleled in the Australian market," added Young.
The new partnership with Netwealth exhibits part of Citi's Custody and Fund Services business growth plan across the Asia Pacific. Markedly, Citi Australia expects more than 20 custodian clients over the next 12 months.
These clients are getting transitioned to Citi as per the client-transfer agreement with Royal Bank of Canada in March. Moreover, the bank might employ a large number of new employees for supporting these clients.
Martin Carpenter, head of Securities Service for Citi Australia said, "We are extremely pleased to deepen our relationship with Netwealth. It's an exciting time for our business as we welcome new clients and team members to Citi and add significant operational scale in the process."
Citigroup has also offered Direct Custody & Clearing (DCC) services in Finland, beginning this August. Citigroup’s move makes it the only global bank offering a pan-Nordic service and expanding the proprietary DCC network covering the entire Nordic region. This July, Citigroup also expanded its commercial banking business in the Nordics, covering Sweden, Norway, Denmark and Finland. The move came on the heels of the rising needs of clients amid the coronavirus pandemic and opportunities foreseen in the fast-evolving digital world.
Our Take
Citigroup continues to execute growth strategies, such as bolstering the company’s position in the booming digital industry and expanding its global market presence, thereby aiming to diversify the bank’s revenue sources. Additionally, the company’s prudent expense management and inorganic expansion strategies keep us encouraged.
However, pending litigation issues might flare up the bank’s legal expenses.
The company has lost 15.2% in the past three months compared with the 1.9% decline recorded by the industry. The stock carries a Zacks Rank #4 (Sell), at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Other banking giants that are also taking restructuring and expansion moves in the current unstable economic environment include JPMorgan JPM, Morgan Stanley MS and Goldman Sachs GS.
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