In what may turn out to be some of the most promising signs of the economic recovery on Wall Street, Citigroup (NYSE: C) has disclosed plans to hire 500 new employees over the next two years.
A bank spokesperson confirmed the rumors earlier today, and this is a welcome sign for the leagues of finance professionals decimated by the financial crisis of 2008 that led to waves of layoffs across the industry. The Financial Times reported that the bank is attempting strengthen its businesses across all geographies by hiring bankers, sales and traders across the Institutional Clients Group in order to grow its corporate and investor businesses. Growth in these areas will be key to the bank regaining it’s position as a leader in the field.
Citigroup Chief Executive Vikram Pandit has done a lot to reverse the culture at Citi, following the failures of his predecessor Chuck Prince that lead to one of the largest bailouts in US history. Now, as the firm continues to shed assets in non core lines of business, and engaged in plans to issue dividends, the perception of the firm may finally start changing. The firm’s stock price has been beleaguered for much of the past three years, and investors are ancy since shareholder value has been diluted so many times. Building new revenue lines is the first step towards rebuilding the brand, and Pandit’s plan seems to be gaining traction.
Citigroup is also in the process of reorganizing its credit card and retail banking businesses in the U.S. Citigroup lost thousands of employees during the financial crisis due to layoffs and poaching from key competitors JPMorgan Chase (NYSE: JPM), and Bank of America (NYSE: BAC). Turnover can decimate a firm in financial services, as the skills and relationships of senior bankers open the doors to significant revenue streams. The turnover put Citi behind its peers in many businesses including investment banking. Citigroup lies in seventh place in the investment banking revenue league tables compiled by Dealogic, according to the Financial Times Group.
While Citigroup’s problems are far from over, for the first time in nearly a decade the firm seems to be leaded in the right direction. Citigroup’s stock price remains in the doldrums, and the announced reverse stock split may help elevate it’s price, but remains fundamentally weak. To overcome that obstacle the firm’s new employee will need to start increasing revenue streams right away, or the firm may be in for yet another lost decade.