Citigroup Hopes to Strengthen Presence Within Retail Banking Industry

Two of Morgan and Stanley's top banking executives, Cecilia Stewart and Will Howle, will join the ranks of Citigroup as the bank seeks to strengthen its retail banking system. Stewart, a veteran of a successful retail-branch development at Wachovia Corp. before serving at Morgan and Stanley, will take over as Citigroup's president of U.S. Consumer and Commercial Banking while Will Howle will serve as her chief operating officer.

This move comes in response to Citigroup's lost grip on the consumer banking industry. The Wall Street Journal writes, "Citibank's branch operations suffered for years, industry consultants say, as a stepchild within a far-flung financial supermarket." Expanding its presence within the retail banking industry is also part of a bigger goal to recover from the meltdown and obtain stability within the market. Citigroup suffered more than $50 billion in loses on risky mortgage assets and other debt.

This is a smart move by Citigroup, given that the retail banking industry generates a steady profit within a lower risk market. However, as Citigroup and other companies look to compensate for lost profits (i.e. increasing interest rates, annual fees, penalties, etc.), ethical questions follow. Is it really ethical for the industry to further tax cash-strapped consumers who have also been severely crippled in the wake of the financial meltdown? Where ought the industry’s priorities fall? With the consumer or indebted corporate bank accounts? This is an interesting and frequent ethical dilemma that goes far beyond issues addressed within mission statements, corporate values, or codes of conduct.

-Molly

WSJ article: http://online.wsj.com/article/SB10001424052748703466704575489760274594260.html