Understanding Finance from scratch

Chapter 24 Those Who Shake Up the World—Know a little about international financial giants every day (3)
The current Morgan consortium still has a strong foundation in the financial industry.Its main pillar is JP Morgan & Company.Morgan Corporation is one of the world's largest multinational banks, with 10 subsidiaries and many branches in the country, as well as more than 1000 communication banks.It has branches or representative offices in about 20 major cities abroad, and has equity interests in financial institutions in nearly 40 countries.Its operation is characterized by buying and selling stocks in large quantities and managing huge trust assets.It controls the equity of 37 foreign commercial banks, development banks, investment companies and other enterprises.In addition, there are manufacturers Hanover Company, New York Bankers Trust Company (also known as Bankers Trust). In 1998, Deutsche Bank, the largest commercial bank in Germany, was approved by the US Federal Reserve Board to invest US$102 billion in the merger of Bankers Trust. ), as well as Northwestern Bank Corporation (which merged with Wells Fargo in 1998), Prudential Life Insurance Company, and New York Life Insurance Company, among others.In terms of industrial and mining enterprises, there are mainly International Business Machines Corporation, General Electric Company, U.S. Steel Company, and General Motors; in terms of public utilities, there are American Telephone and Telegraph Company (AT&T) and Southern Company.

In terms of production, there are 35 directors of Morgan & Co. among the 47 major companies in the United States.Including US Steel, GM (General Motors), Kenigat Special Copper Company, Texas Gulf Sulfur Company, Continental Oil Company, GE (Singular Electric), etc.

Morgan's penetration of the railroads is well known, and in services it also owns Consolidated, ITT (International Telephone and Telecommunications), National Cable, Postal Cable, AT&T, and others.

The two major banks of the Morgan alliance-National City Bank and Contract Bank have total assets of 510 billion U.S. dollars, and their major trusts such as Anakota Copper Mountain, American Taro, Cuban and American Sugar, Westinghouse Electric, and United Metal Carbide Enterprises also belong to the Morgan Union.

Citigroup: an omnipotent financial supermarket with unlimited scenery
The U.S. Bank Holdings Act in the early 20s prohibited banks from engaging in the securities and insurance industries and "businesses not necessarily related to the financial industry" in the form of holding companies.However, the law intentionally or unintentionally leaves a loophole, that is, the so-called single bank holding company that only owns one bank is not included in the scope of supervision.Citibank quickly established a single bank holding company, Citicorp, in Delaware, and put Citibank under the control of the holding company.This Citigroup is purely a brand name, but Citibank has achieved penetration into securities, insurance and "businesses that are not necessarily related to the financial industry" through it, bypassing the strict GS law that was hastily passed in the United States during the Great Depression in 70. The partition wall for separate operations is already a remarkable institutional innovation in itself.Reston has made persistent efforts, mobilizing all employees to offer suggestions for expanding the scope of banking business, and collected dozens of business suggestions that can be further developed.Immediately, Citibank submitted a large number of new business applications to the Fed, sometimes as many as one per day.Since then, Citibank has emerged as the leader of the US banking industry.

So, what about the development of Citibank in recent years?

At the end of 2004, a survey of 1000 CEOs published by the British "Financial Times" showed that Citigroup was the most respected financial service company in the world.

Respondents generally believe that Citigroup's huge scale and its brilliant achievements in the financial field are the most eye-catching.

As an extremely large financial group, Citigroup has nearly 100 million customers in more than [-] countries around the world, including individuals, institutions, enterprises and government departments, providing a wide range of financial products and services - from consumer banking services to credit, corporate and investment banking services, ranging from brokerage, insurance and asset management, unmatched by any other financial institution.

For decades, Citigroup has prided itself on its aggressively aggressive approach to borrowing, trading and profiting.It embraces new technologies and introduces new products more readily than its competitors. In 2003, as the world's largest bank at that time, Citigroup operated in more than 100 countries on six continents, with a total revenue of US$774 billion and a profit of US$180 billion, making it one of the most profitable companies in the United States.

When we mention Citibank, we have to talk about Walter Reston.Walter Reston was born in 1919.His father, Henry Reston, was an influential expert in history and political science, and once served as the president of Brown University, one of the famous Ivy League schools in the United States.Curiously, the history professor and his wife, Ruth, had a beautifully bound copy of Adam Smith's Wealth of Nations next to the cradle of newborn Walter.If they wanted their son to inherit their father's business, Herodotus' "History" should be a more suitable book beside the cradle.Walter did not live up to his parents' expectations. His life's achievement was in the banking industry in the United States, and he worked for an ancient and luxurious bank in the United States-Citibank.

When the young Wriston first set foot in the American banking world, the financiers were all powerful white men who held a lot of social status.Full-fledged and old-fashioned and conservative, afraid of taking risks, and lacking entrepreneurial courage and vision, these constituted the main characteristics of the banking industry at that time.It was under such circumstances that Reston was determined to forge ahead and was full of innovative spirit. His talent was quickly appreciated by the management, and he was transferred to the credit department and overseas department successively, both of which made good achievements.So in less than 20 years, Reston jumped to become the president of Citigroup.

Walter Reston actually managed such a bank for 17 years in his prime, and decisively enhanced Citigroup's international status and brand value, attracting not only the attention of the US banking industry, but also the global attention focus.Reston has been an unavoidable figure in the United States and the world for a long time.

Achievements in the lending industry opened up another brilliant avenue for Reston's career: Citigroup handed over the Citibank website, the most profitable overseas business unit, to Reston.

At that time, Citigroup's overseas department was 10 years behind other domestic departments. Although it made some profits, it made little profit. At that time, it could only be described as "primitive", but it established the largest banking machine negotiation network overseas in the US banking industry. .Citigroup's overseas business started with railway loans in Latin America, and later expanded to the Philippines, Japan and Europe.

After taking office, Reston established the first foreign-funded bank in Africa—the Southern African Branch with extraordinary courage and wisdom. Later, he set up branches all over Africa and formed the Citigroup Africa Overseas Department. After political, diplomatic, economic, etc. Channels of all kinds have opened up branches in the Soviet Union and rival Iran during the Cold War in every possible way and unprecedentedly.He restored Citigroup's branch in China, and spent 10 years spreading the European branch network to European countries, and the Australian branch also made a lot of money.These achievements convinced Reston that Citigroup's mission was to provide legally compliant banking services in every profitable location in the world.

As one of the most important mortgage companies in the United States, Citigroup issued a total of US$2006 billion in loans in the fourth quarter of 506, ranking third among US mortgage companies.After the outbreak of the subprime mortgage crisis, Citigroup's asset level was also hit hard.

Due to bad debts, the third quarter of 2007 Citigroup profit fell 57% over the same period last year.From July to September of that year, Citigroup made a profit of US$7 billion, far lower than the US$9 billion in the same period last year.In addition, due to the accelerated growth of housing mortgage bad debts in September, Citigroup's mortgage bond business lost US$23.8 billion in the third quarter, which was higher than previous market expectations.At the same time, Citigroup also increased its provision for bad debts by $55.1 billion, a charge that was also higher than originally expected, as consumer credit conditions deteriorated further.These factors led to Prince's subsequent resignation.Citigroup shareholders also filed a lawsuit in Manhattan federal court during this period, accusing Prince and several other executives of reckless investment in subprime mortgage-related bonds, resulting in huge losses for the group.

In November 2007, Citigroup announced that the Abu Dhabi Investment Authority (ADIA), the sovereign fund of the United Arab Emirates, would invest US$11 billion to acquire a 75% stake in the group to increase its capital adequacy ratio.Citigroup said the funds will be used to offset the group's previous losses caused by mortgage loans and other investment projects.The capital injection will bring the group's capital adequacy ratio back above regulatory targets in the first half of 4.

而此后花旗仍未能摆脱次贷的“噩梦”。花旗集团2008年第三、第四财政季度连续亏损28.1亿、82．9亿美元。2007年全年，花旗净亏损187．2亿美元。

Since the financial crisis, the U.S. government has extended a helping hand to Citigroup three times, buying a large number of Citigroup preferred shares, investing a total of 450 billion U.S. dollars and more than 3000 billion U.S. dollars in asset guarantees.But so far, Citigroup's operating performance has not improved.

After the split of the group, some companies will be named Citibank, which will focus on Citigroup's banking business in more than 100 countries; another part of the company will be Citi Holdings, and its business will include asset management and consumer financing.Citigroup will primarily focus on the disciplined management of risks and losses.

Whether Citigroup can get out of the quagmire of the financial crisis and regain its former glory, let us wait and see!
royal bank of scotland
Royal Bank of Scotland chief executive Sir Fred was born in Paisley, a suburb of Glasgow, the son of an electrician.Under his leadership, RBS has been on the road to acquisitions at a brisk pace.

The Royal Bank of Scotland is a bank with a proud tradition and a small balance sheet - in 1727 the bank received a royal charter from King George I.But when rival Bank of Scotland launched a hostile takeover for the much larger Natwest, Sir Fred was touched and felt compelled to respond.After a protracted bidding war, Royal Bank of Scotland won.The deal catapulted RBS into the top camp in the banking industry.It also allowed Sir Fred to play to his strengths, earning him the nickname "Fred Scissorhands" due to his success in cutting costs as chief executive of smaller Clydesdale Bank ".By personally taking charge of the 111 cost-cutting programs RBS has committed to, Sir Fred's savings have exceeded the bank's expectations.Investors cheered the move, sending the bank's shares soaring, clearing the way for RBS to buy British insurance group and US retail bank Mellon Financial.

As an international bank, what is the current development status of Royal Bank of Scotland?
Founded in 1727 and headquartered in Edinburgh, England, the Royal Bank of Scotland Group is one of the oldest commercial banks in the United Kingdom.After continuous development and acquisitions, by 1969, Royal Bank of Scotland became the largest bank in Scotland with 700 branches and 40% local market share.The bank is ranked number one in corporate, personal and overseas banking in the UK and number two in retail banking and private motor insurance.RBS Group has more than 2000 branches in the UK and Ireland, serving more than 1500 million customers.

Before 2000, the Royal Bank of Scotland was still a regional bank headquartered in Edinburgh, a city in the north of England, and ranked after 200 in the World Bank ranking.But as of June 2004, 6, the capital market value of Royal Bank of Scotland had reached 30 billion pounds, and its total assets had increased to 490 billion pounds, making the bank a bank with 5190 million customers and 2200 employees, AA credit rating, UK It is the second largest commercial bank in Europe and the fifth largest commercial bank in the world.It can be seen from the development history of the Royal Bank of Scotland that although the bank is a century-old store, its concepts and ideas are not conservative. It can not only adapt to the changes of the times in a timely manner, but also become a market leader. In 12.5, the Royal Bank of Scotland merged with the Commercial Bank of Scotland to make itself the largest commercial bank in Scotland; in the 1969s, it successively established auto insurance companies, telephone banks, and online banks, making the Royal Bank of Scotland the most dynamic bank in the UK. One of the famous banks; in the 20s, it not only reduced the bank's operating costs, but also improved the bank's profitability and market competitiveness through the implementation of the back-office business centralized processing project.

In February 2000, the Royal Bank of Scotland successfully acquired the National Westminster Bank, which was three times larger than its own capital, which made the Royal Bank of Scotland complete a key step into a world-renowned commercial bank.The acquisition involved an amount of 2 billion pounds, setting a record for the highest amount of banking acquisitions in British history.From this successful acquisition case, we can also see the courage, wisdom, creativity and execution of the Royal Bank of Scotland.

In fact, it was not the Royal Bank of Scotland that first proposed the acquisition of NatWest Bank, but another British regional bank located in Scotland, the Bank of Scotland.The common feature of the Bank of Scotland and the Royal Bank of Scotland is that the capital scale is small, but the operation and management are very good, and the fee-to-income ratio is particularly low. From 1993 to 1998, the fee-to-income ratio of the Royal Bank of Scotland dropped from 56% to 52%, while the fee-to-income ratio of the Bank of Scotland remained at 48%, while the fee-to-income ratio of the National Westminster Bank increased from 66% during the same period. rose to 68%.Therefore, both banks believe that the acquisition of NatWest will broaden the space for further development of their own banks.

At first, the two banks planned to jointly acquire NatWest Bank, but because they did not reach an agreement on the acquisition process and management after the acquisition was successful, RBS decided to acquire NatWest Bank separately.

After the Royal Bank of Scotland made this bold decision, the bank proposed a set of development strategies with clear development strategies and feasible operational details through top-down analysis of the overall benefits of the acquisition, bottom-up profit testing of sub-business lines and analysis of management personnel capabilities. acquisition plan.Due to the well-prepared, detailed and feasible acquisition plan, Royal Bank of Scotland not only won the bid to acquire NatWest Bank in one fell swoop, but after the acquisition was successful, various measures in the acquisition plan (such as leadership staffing, division of responsibilities, Internal risk control, reporting system, performance evaluation, etc.) were quickly put in place and well implemented.After the completion of the acquisition, the actual cost reduction and income increase of the Royal Bank of Scotland far exceeded the pre-acquisition expectations.

After the Royal Bank of Scotland acquired the National Westminster Bank, it implemented a unified brand strategy in terms of corporate and financial market service companies and institutional customers, that is, the original National Westminster Bank's corporate and institutional businesses were unified with the Royal Bank of Scotland The brand of the bank; in terms of retail business, in order to reduce the impact on the original personal customers of National Westminster Bank, on the premise of realizing the unified product, financial and risk management of the retail business, a multi-brand strategy was implemented, that is, The retail business brand of the former National Westminster Bank has been retained and a unique multi-brand retail business structure has been formed.

But in 2008, due to the further deterioration of the credit and financial market environment, RBS suffered a loss of 2008 billion to 70 billion pounds (about 80 billion U.S. dollars) for the whole year of 118.Losses could rise by between £150 billion and £200 billion if goodwill losses are included, the latter largely related to the bank's takeover of ABN AMRO.

This also means that the cumulative losses of the Royal Bank of Scotland can reach 280 billion pounds, about 410 billion U.S. dollars, setting a new record for the annual loss of a British company in one fell swoop.Previously, this disgraceful record was maintained by the telecommunications giant Vodafone, which suffered a huge loss of 2006 billion pounds in the 220 fiscal year.

(End of this chapter)