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Citigroup To Close Municipal Underwriting And Market-Making Unit, Per Memo.

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Citigroup To Close Municipal Underwriting And Market-Making Unit, Per Memo.

(CTN News) – According to a memo obtained by Reuters, Citigroup has decided to cease its municipal underwriting and market-making activities.

The memo, signed by Citigroup’s head of markets Andy Morton and interim head of banking Peter Babej, stated that the economics of these activities are no longer sustainable in light of the firm’s goal to enhance overall returns.

The bank plans to wind down the unit in the first quarter, resulting in the departure of most employees.

Last month, discussions regarding the future of the unit prompted a group of bankers to join Jefferies. Bloomberg initially reported on the memo earlier today.

It is worth noting that Citi’s municipal offering business has faced scrutiny from the Texas attorney general, who suspended the bank’s ability to underwrite most municipal bond offerings in Texas due to allegations of discrimination against the firearms sector.

This decision by Citigroup reflects the challenges faced by the municipal underwriting and market-making activities. The firm has determined that the economics of these activities no longer align with its goal of enhancing overall returns.

As a result, Citigroup plans to wind down the unit, leading to the departure of most employees.

The move comes after discussions about the future of the unit prompted a group of bankers to join Jefferies, indicating that there may be better opportunities elsewhere in the market. Bloomberg initially reported on the memo, bringing attention to Citigroup’s decision.

It is important to note that Citigroup’s municipal offering business has faced scrutiny from the Texas attorney general.

The bank’s ability to underwrite most municipal bond offerings in Texas was suspended due to allegations of discrimination against the firearms sector.

This scrutiny may have further contributed to Citigroup’s decision to cease its municipal underwriting and market-making activities.

Overall, this decision by Citigroup reflects the firm’s strategic focus on enhancing overall returns and aligning its activities with sustainable economics.

The wind-down of the unit and the departure of employees will likely have significant implications for the firm’s operations in the municipal underwriting and market-making space.

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