6. 6
What caused it the storm?
● World wealth increasing ($70 trillion)
● Centralized debt obligations, Credit default swaps
● Highly leveraged economies & companies
● Consumption, debt, savings
● Concentration of risk
● Risk models in uncharted waters
● Monetary policy of growth vs. inflation
● Housing bubble
● Global interconnectivity
6
7. 7
Resulting in a domino effect
• Credit crisis
• Deflation / Inflation
• Unemployment
• Financial system breakdown
7
8. 8
Unprecendented scale, static, distruption
• Scale is global for the first time
• No systems to address new reality
• Stress beyond elastic limits that govern our understanding of
the economic system
• Unsteady state models needed
8
9. 9
A generation marking event
World War I
Russian Revolution
Great Depression
World War II
United Nations established
European Economic
Community effective
Oil Crisis began
Fall of Soviet Union
Early 2000
recession
Subprime and the
credit crisis
1914 1917 1929 1939 1945 1958 1973 1991 2001 2007
9
10. 10
Sub-prime lending and credit crisis led to a global equity market collapse
in 2008; Currently the market is in a positive momentum to achieve
previous levels …
Market value
$ billions
Annual Change
Percent
S&P Global 1200 Index
Source: Bloomberg
• S&P Global 1200 index
captures 70% of the world’s
capital market
• The index witnessed an
increasing trend beyond
2009 after the effect of
recession seemed to fade
• After having reversed almost
all of the gains since 2001 in
2008, the index is in a
positive momentum to
achieve previous levels
22,286.4
24,333.4
29184.0
31,566.2
18,534.2
24,542.1
27,077.5
28,626.5
(50.0)
(40.0)
(30.0)
(20.0)
(10.0)
0.0
10.0
20.0
30.0
40.0
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2004 2005 2006 2007 2008 2009 2010 2011
Note: Data for years 2003 through 2009 represent market
value as of December 31 of respective years * 2011 data is
as of March 3, 2011
10
11. 11
The deteriorating macroeconomic conditions that caused
unprecedented correction in oil prices seems to be improving
Brent Crude Oil Price (Monthly Average), 2003-2011
• Crude oil prices
declined from a high
of $145/bbl in July’08,
especially during
January’09. However
has witnessed a trend
reversal entering 2011
in a strong note
• Scale of decline has
by far been reversed
$
Source: Bloomberg
12. 12
The crisis intensified in September and October and historic losses
savaged the leading stock market indices
12 01/09/09
Oct 15
Oct 9
Sep 29
Oct 7
Sep 15
Largest One Day Fall in the Dow, Sep-Oct, 2008
Percent change
-7.9%
-7.3%
-7.0%
-5.1%
-4.4%
-4.1%
-3.3%
Source: Bloomberg
*Dow Jones Industrial Average
Sep 17
Sep 22
Jan-2009
• 9th largest one day
loss in percentage
terms in the history of
the Dow
• In point terms, the
Dow witnessed four of
the top ten largest one
day point losses
during the in
September and
October
13. 13
The recent crisis ended in June 2009 and was the longest since the Great
Depression
• According to the National Bureau of
Economic Research, the U.S.
recession that began in
December 2007 ended in June
2009
• The 18-month slump was the
longest since the Great
Depression
• Reasons behind the long duration
of the recession attributed to the
plunge in household wealth, as well
as financial crises in the U.S. and
overseas
Major Recessions in the US Economy
Months
Source: National Bureau of Economic Research; news articles
14. 14
… with the magnitude of the scale nearly improving
One Year
Ago
(12-31-09)
Today
(03-03-11)
Citigroup Market Value
$ billions • Larger than the revenue of all but
38 companies on the Fortune
Global 500 Ranking
− About the size of Honda
Motor or ArcelorMittal
(based on 2007 revenue)
• Larger than the gross state
product of 18 states in the U.S.
(including the District of
Columbia)
− About the size of Utah
(based on 2007 gross state
product)
• Larger than the GDP of 11
countries in the worldSource: Standaard & Poor’s; Thomson Financial; Fortune; BEA; World Bank
15. 15
US has reduced its Fed fund rate to near zero and announced a shift in its
finance policy…
Federal Reserves Fund Rate, 1974-2011
Percent
• Federal Reserve abandons
its official target rate of 1%
• Fed fund rate now stands
reduced to an
unprecedented 0 to 0.25%
• Has indicated a shift in its
finance policy to
‘quantitative easing’ in an
attempt to revive the
economy
• Near zero rate is expected to
help stabilize housing prices
• However, this could also
weaken the US dollarNote: Instrument - Federal funds
Maturity - Overnight
Frequency - Monthly
Description - Federal funds effective rate
Source: Federal Reserve Board
16. 16
This uncertainty will be compounded by increased volatility
Source:Bloomberg
0
10
20
30
40
50
60
70 Series1
Series2
Volatility Indices
(Chicago Board Options Exchange Volatility Index)
Unprecedented
volatility has
emerged
17. 17
When a butterfly flaps its wings in Brazil…
Source:Edward N. Lorenz, The Essence of Chaos
28. 28Source: Forrester Research, News articles
The economic downturn resulted in lack of trust towards the
banking institutions …
The tough financial regulatory
reform bill passed by the
government in July 2010 put
banks business practices in a
harsh light
*
Lacking trust
29. 29Source: Forrester Research, News articles
Consumers believe financial institutions
negatively impacted the economy
Attitudes toward big financial companies and the role they
play in this country*
Percent
Government intervention to give money to big banks and
investment firms was a good idea or bad idea*
Percent
*Survey of 5,612 US and Canadian households and individuals ages 18 and older **The Bloomberg National Poll, conducted December 2009 for Bloomberg News by Selzer
& Co. Inc. is based on interviews with 1,000 U.S. adults ages 18 or older.
*
Shouldering blame and responsibility
30. 30
Wall street executives are least favorable than Congress
Impression of people for major U.S. institutions*
*The Bloomberg National Poll, conducted December 2009 for Bloomberg News by Selzer & Co. Inc. is based on interviews with 1,000 U.S. adults ages 18 or older
Very Mostly
Favorable Favorable
Small business 53 39
The military 52 35
Doctors 32 53
The White House 18 33
Lawyers 7 32
Insurance companies 6 30
Corporate executives 5 24
Congress 4 25
Wall Street executives 3 15
31. 31
● Congress ● Press ● Pundits
Increased oversight
So many bosses
31
36. 36
Fix the urgent
● Shore our capital reserves
● Revamp risk
● Revamp management
● Divest businesses
● Constant conversations with our stakeholders
36
37. 37
Work on the short-term
● Daily wake up call
● Sentiment read every 24 hours!
● Messaging response tested daily
● Rapid response team - minimize lags
● Cross-functional expertise is critical
Assess the situation & provide a rapid response
37
38. 38
Position as a leader
• Regular press
• Insights about the consumer
• Hopes, aspirations, fears
• Spending, saving habits
38
39. 3939
…and the results have been extensively covered by the media
Citibank’s press releases on surveys it conducted
New Citi survey finds majority of Americans have cut back on everyday expenses; nearly half only shopping
for what they absolutely need
– October 2010
New Citibank survey reveals a meaningful increase in economic optimism for 2011
– February 2011
New Citi survey finds 62% of Americans believe the economy has yet to hit bottom
– July 2010
New national survey by Citi reveals consumers across all income levels and ethnic groups have permanently changed
their saving and spending habits – September 2009
Media coverage
40. 40
Print and Online
• 23 articles and over 720 online outlets
Broadcast
• Aired on 6 national and regional broadcast outlets
Radio
• Aired on 6 national and regional radio outlets
Combined results
40
41. 41
National Survey
“’This new survey points to a profound shift in the way people think about their saving and
spending. The current economic environment is altering, perhaps permanently, the way we think
about spending money,’ says Eric Eve, senior vice president, Global Community Relationship at
Citi.”
“A Citi survey out today found that
people nationwide have made what
they call permanent spending and
savings changes linked to the
economic downturn.”
“A majority of U.S. consumers say they
have permanently changed their
spending and savings habits in response
to the global financial markets crash and
recession, according to a Citigroup survey
released on Friday.”
“Lisa Caputo from Citigroup says
women have been reassessing:
many working moms are going
back to school to improve their
economic opportunities. She's
encouraging women to save as they
earn and plan for time-outs in life,
but there's no question, this
recession has taken a toll.”
“Working mothers have been hardest hit,
with more than half (53 percent)
indicating they work longer hours to make
ends meet, compared with just 24 percent
of women without children and 33 percent
of men, according to a new study from
Citi.”
“And we're seeing in the survey done by Hart Research that
really they're telling us that they are permanently changing
their spending and savings patterns. I think not only is it a
transformational recession, but it's also telling us that women
are an economic barometer that can't be overlooked when it
comes to how we're going to move as a country out of this
recession.”
41
42. 42
“Perhaps surprisingly, a survey by banking giant Citigroup Inc found minorities had a
more positive view of the economy than the majority of Americans. Of 100 blacks and
Hispanics surveyed earning between $25,000 and $50,000 a year, about half believed
the economy will improve over the next six months, compared to 38 percent of a larger
national sample of workers.”
“Through our work and our network of
partnerships, [we] are committed to helping
communities and citizens across the country
as they navigate these difficult financial
times.” “Citi’s study of consumer
sentiment among low- to
moderate-income (LMI)
African American and
Hispanic communities in the
Chicago area, found that
both communities expressed
more optimism about the
national economic outlook
than a national
representative sample of
cross-ethnic respondents,
and are taking a more
cautious approach to saving
and spending practices.”
Consumer Sentiment Survey: Focus on Chicago
“The study showed…first and foremost, a level of increased optimism in our
communities here in Chicago in African American and Hispanic communities,
particularly in low- to moderate-income communities.” – Eric Eve
“’This new survey points to a profound
shift in the way people think about
their saving and spending. The current
economic environment is altering,
perhaps permanently, the way we
think about spending money,’
“A Citi survey out today found that
people nationwide have made what
they call permanent spending and
savings changes linked to the economic
downturn.”
“A majority of U.S. consumers say they have permanently changed their spending and savings
habits in response to the global financial markets crash and recession, according to a Citigroup
survey released on Friday.”
42
43. 43
Women’s Survey
“Lisa Caputo from Citigroup says women have been reassessing:
many working moms are going back to school to improve their
economic opportunities. She's encouraging women to save as they
earn and plan for time-outs in life, but there's no question, this
recession has taken a toll.”
“Working mothers have been hardest hit, with more than half (53
percent) indicating they work longer hours to make ends meet,
compared with just 24 percent of women without children and 33
percent of men, according to a new study from Citi.”
“And we're seeing in the survey done by Hart Research that really
they're telling us that they are permanently changing their spending
and savings patterns. I think not only is it a transformational
recession, but it's also telling us that women are an economic
barometer that can't be overlooked when it comes to how we're
going to move as a country out of this recession.”
43
44. 44
Mortgage Reports: Linking Community with Business
“Citigroup released its eighth quarterly mortgage data report today,
touting the fact that it had helped ‘approximately 130,000
distressed homeowners with loans it owns or services remain in their
homes and avoid foreclosure on mortgages valued at more than $20
billion.’”
“Citigroup Inc. (C) helped 108,000 mortgage holders avoid foreclosure
in the second quarter, a nearly 30% increase over the volume of
borrowers it helped in the first quarter, the company said Tuesday.
The number of efforts to keep borrowers in their homes was higher
than the number of foreclosures completed by Citi borrowers by a
ratio of more than 12-to-1 in the second quarter - double the ratio
from six months ago, the company said.”
“‘It's going to be a tough slog for the next couple of quarters
because unemployment will have its consequences,’ Sanjiv Das, the
chief executive of CitiMortgage, said in an interview. ‘But we have
the capacity and infrastructure to deal with that. Our ability to slow
down the rate of loans going into foreclosure has gone up
significantly.’”
44
46. 46
● Look Ahead
● Look Back - History
● PODs
● Priority segments and LOBs
● New vision
● New mission
● New Citi positioning
Strategic analysis
47. 47
Anticipate
US from 4th to 1st
largest economy
Japan biggest
gains from 3% to
10% of world ‘s
economy
China, India and
EM countries
growth results in
major shift of
power
Poised to enter a new growth super cycle
47
49. 49
Four out of
the top five
economies
will be EM by
2030
Largest Economies by Decade
2000 US$ Tn 2010 US$ Tn 2030 US$ Tn
1 US US China
2 Japan China US
3 Germany Japan India
4 UK Germany Brazil
5 France France Indonesia
6 China UK Japan
7 Italy Italy Germany
8 Canada Brazil Mexico
9 Brazil Canada France
10 Mexico Russia UK
Contributions to global growth (%)
10.0
4.7
1.9
1.5
1.3
1.1
0.7
0.6
0.6
1.2
14.6
5.6
3.3
2.6
2.3
2.0
1.6
1.5
2.0
5.9 38.2
8.4
8.2
6.4
5.6
6.6
9.3
12.2
30.3
73.5
Source: “The World in 2050”; HSBC, January 2011
Opportunity: harness emerging market growth
50. 50
Founded in 1812, Citibank has a rich heritage
RANK BRAND YEAR INTRODUCED VALUE ($M)
1 Coca-Cola 1886 70,452
2 IBM 1880 64,727
3 Microsoft 1984 60,895
4 Google 1996 43,557
5 GE 1890 42,808
6 McDonald's 1937 33,578
7 Intel 1968 32,015
8 Nokia 1865 29,495
9 Disney 1923 28,731
10 Hewlett-Packard 1957 26,867
25 Nike 1972 13,706
62 Adidas 1949 5,495
97 Starbucks 1971 3,339
Source:Interbrand
51. 51
Before a financial practice can become a global industry standard, there has to be a pioneering
bank. There has to be a bank that envisions something different, innovates, and works to implement
it worldwide. For the past two centuries, Citibank has unequivocally been that institution.
52. 52
Continuous consumer insights
• Intensive global qualitative and quantitative research
• Understand the financial landscape and market position
