Looks like another busy weekend for Citigroup and Morgan Stanley. It has been confirmed that the two companies are in talks to combine their Wealth Management divisions. Word on the street is that it's about a $3 billion deal, and would make the combined company larger than BofA-Merrill.
Former Treasury Secretary and Goldman Sachs golden boy Robert Rubin is also resigning as Citigroup's top gopher, having moved from the CEO spot to director of the executive committee, and then down to lunch lady or some other meaningless post.
Question: Will the culture clash between these firms be as extreme as what's happening down the street at BofA-Merrill?
This is a very good deal for Morgan Stanley
Horrible for Citigroup....
Citigroup might be the first victim of 09 if the management doesn't make any drastic movement, they need to clean up their balance sheet before it's too late..
they have 300000 workers and assuming that they pay 100k per year
that costs them $30 billion a year.
Citigroup needs to break up and cut their workforce by 60 to 70% if they want to survive, if not, we will sadly not see Citigroup next year.
100k average?! cannot believe that, even counting in the administrative personnels?
wow
Ya that 100k average figure is sounds very high
he said: assuming
So the situation is so bad at Citi that they are forced to sell one of the business lines that is actually generating considerable revenue.
Brilliant.
hate to sound like such a typical college student.. but how would this affect the offers currently given out on both Citi and MS's side. and, which divisions would be most affected? i'm not entirely familiar with Smith Barney's operations.. i imagine it'll affect MS PWM a bit, but what about others? website says Smith Barney has wealth management, "banking," "brokerage," etc..
Thanks in advance.
i also would like to know how it would affect offers at both firms.. especially PWM at both groups?
Quite frankly, PWM is a different business model than is IBanking. Citibank, BTW, has two PWM groups, Global Wealth and Smith Barney.
Not being too familiar with how Smith Barney does its operations, I cannot accurately comment on what MS can leverage from the relationship, but this is a huge revenue generator for MS. What will happen is that you will have a culture clash as the two firms merge, but everything will essentially be business as usual. They won't fire of the financial advisers, as they generate the money or their direct support staff.
You will potentially see a consolidation of accounts (if a broker at MS and a broker at SB both have the same account, who gets it, for example), and layoffs in the back office, clearing services, support, trading, product services, etc. New hiring will be reduced in general, but if a broker needs an additional person on his team, he will hire someone if he can afford it and has a book that supports having multiple people to support him. Most adviser support staff gets a base salary and a percentage of commission [either a smaller portion of the gross or a larger portion of the net]. Additionally, firms will cap the number of support staff a team has in general as a factor of how big their book of business is.
But the average comp at Citi is definitely over 50k, which means 15 billion a year at the very least, still a good chunk of change considering the writedowns they've been taking.
Does anyone know how this will effect the rest of the banks? Is this the first step of a full-on Morgan Stanliti?
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