Dive Brief:
- Citi plans to wind down its municipal business by the end of March, the bank said Thursday in an internal memo.
- The bank’s exit from the space will affect about 100 employees, a person familiar with the matter told Bloomberg.
- Citi, once a leading player in the $4 trillion municipal market, suffered a revenue hit after Texas politicians froze the bank out of a number of deals in the state over its firearms policies, according to the wire service.
Dive Insight:
Citi’s municipal division is the latest casualty of CEO Jane Fraser’s plan to streamline the bank’s activities. That encompasses exiting more than a dozen retail markets across the globe. More recently, the plan has expanded into a wide-scale restructuring aimed at weeding out excess layers of management and consolidating roles whose efforts duplicate one another.
The business is “no longer viable given our commitment to increase the firm’s overall returns,” Citi’s head of markets, Andy Morton, and interim head of banking, Peter Babej, told staff in the memo, which was shared with Banking Dive.
“Over the past several months, we have conducted a broad-based review of our U.S. Municipals business,” Morton and Babej wrote. “With the review now complete, we have made the difficult decision to wind down our municipal underwriting and market-making activities.”
The bank said it plans to support its municipal clients on all pending capital issuances, including execution of pipeline transactions, as well as transition to other underwriters.
The decision to exit the municipal space comes as Citi last month laid off more than 300 senior managers. Cuts connected to the municipal wind-down could total roughly 100 employees.
“Most of our municipal sales, trading and banking colleagues will unfortunately be leaving Citi over the next few months,” Morton and Babej wrote. “While it is difficult to say goodbye to these talented individuals, please join us in expressing our appreciation for their years of dedication to Citi and our clients.”
Citi’s restructuring plan is set to wrap up by March, with another round of cuts expected in January.
