Citi's top executives are weighing buying another bank, a move long considered inconceivable, as the firm wraps up years of work to address regulators' criticisms.
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Senior leaders of the New York-based firm have held preliminary discussions in recent months about trying to acquire a major U.S. regional lender to dramatically ramp up deposits, a move that could provide more fuel for the Wall Street bank's lending and trading operations, according to people familiar with the matter.
Some executives broached the possibility of a takeover during a meeting with U.S. regulators this year, said the people, asking not to be identified describing private deliberations. Authorities signaled an openness to considering a concrete proposal.
The conversations are in early stages, and Citi remains under a pair of consent orders that require it to seek regulatory approval before attempting to make an acquisition. There's no guarantee the firm will make a formal approach, one person said. Some of the people noted that executives have also discussed pursuing a brokerage.
"The suggestion that Citi is planning to buy a regional bank, wealth brokerage — or any other financial services firm — is baseless speculation," Citi said in a statement. "At this time, we are solely focused on growing organically by executing our strategy and completing our transformation."
The company's stock was down 3.8% as of 12:30 p.m. on Friday in New York, after Bloomberg reported the internal talks.
Any multibillion-dollar acquisition would mark the boldest step yet in Jane Fraser's five-year tenure as chief executive officer, in which she has largely focused on simplifying the company, streamlining the workforce and improving returns. Buying a regional bank would transform Citi, which almost collapsed during the 2008 financial crisis, by giving it branches across a swath of the country — more akin to JPMorganChase and Bank of America.
Some of the people said Citi could be interested in banks with around $500 billion in assets in the U.S., a group that includes Charlotte, North Carolina's Truist Financial and Pittsburgh's PNC Financial Services Group, which each have market capitalizations over $50 billion. A takeover of that magnitude would rank among the largest ever in U.S. banking, potentially nearing Citi's record $70 billion merger with Travelers in 1998.
Executives have also expressed aspirations to buy a brokerage such as Stifel Financial or Raymond James Financial, the people said. That would give the bank more access to wealthy Americans and their deposits while generating steady fees.
Representatives for Raymond James and Stifel declined to comment.
Fraser, 58, led Citigroup's consumer bank before becoming CEO in 2021. She recently promoted Gonzalo Luchetti to chief financial officer after he ran the domestic retail bank and credit card business for years. The U.S. retail unit, now run by Kate Luft, has been moved into Andy Sieg's wealth division.
Some of the top brass have long wished their company had invested more in business lines that attract deposits to better compete with JPMorgan and Bank of America, which benefit from branches spanning most of the country, according to one of the people. Truist has more than 1,900 branches and spans 17 states and the District of Columbia.
But a big takeover would risk stoking the long-running U.S. debate over "too big to fail" banks, especially given Citi's historic role in a wave of acquisitions that created global financial "supermarkets" by merging Main Street lenders with Wall Street operations. That era culminated in 2008 with the financial crisis.
Citi survived that turmoil by soaking up more government support than any of its competitors. Its risk-taking, faulty internal oversight and reliance on taxpayers made it a prime example of the systemic risk that weakened banks can pose.
In the years that followed, it lost much of its deposit-gathering capacity when it agreed to sell its Smith Barney wealth brokerage to Morgan Stanley, and its retail banking footprint shrank as it shuttered branches to focus on affluent U.S. cities. Under Fraser, the firm has also exited retail banking businesses in more than a dozen countries.
As a result, deposits held by Citi's U.S. retail arm pale in comparison to those held by JPMorgan and Bank of America. Citi reported $89 billion of average deposits within its U.S. personal banking unit last year, while JPMorgan had $1.1 trillion in its consumer and community banking division.
Despite Citi's status as the third-largest U.S. bank, it had a relatively anemic 655 branches concentrated in a small number of urban areas at the end of last year. That compares with more than 5,000 branches operated by JPMorgan across the continental U.S.
Citi's consent orders were imposed in 2020 by the Office of the Comptroller of the Currency and the Federal Reserve, with overseers citing deficiencies in risk management, internal controls, data handling and technological infrastructure. In 2024, the OCC imposed an additional fine, saying Citi had failed to meet "milestones" in improving itself, but the bank has since said it's approaching the final stages of the problems it needs to fix.
President Donald Trump's administration has sought to boost the economy by loosening some of the strictest regulations put in place after the lessons of the 2008 crisis.
And given his supportive attitude toward dealmaking, executives inside Citi consider it likely that they could win a nod from regulators and complete a major transaction, one of the people said.
"The Fed has done a terrible job on Bank Regulation," Trump posted on social media days after taking office last year. He vowed that his administration would ease "unnecessary" rules and "unleash lending for all American people and businesses."
