Citigroup’s Roaring Revival on Wall Street
The bank’s resurgence on Wall Street is all the more remarkable because it is taking place as many of its rivals pull back in the face of new regulations intended to make the financial system safer. The Wall Street operations of JPMorgan Chase and Goldman Sachs, for instance, have remained steady or shrunk during the last four years.
Citigroup’s advance has involved acquiring vast amounts of derivatives, the financial instruments that gained notoriety during the 2008 financial crisis. It has at times snapped up derivatives from other banks that have been selling them to comply with new rules.
.. In 2009, Citibank, Citigroup’s main banking subsidiary, had $32 trillion in derivatives, according to regulatory filings. That figure more than doubled, to $70 trillion, in the third quarter of 2014.
.. Citigroup, for instance, bought credit derivatives last year with a notional value of $250 billion from Deutsche Bank, Germany’s largest bank and a big Wall Street player, in a deal reported by Risk magazine. European banks are shedding certain derivatives because they are ahead of their United States counterparts in applying provisions of a capital regulation known as the Basel III leverage ratio.