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Morning Coffee: Citigroup's difficult challenge. Goldman Sachs' alpha equities salespeople

Today is the day that Citi (along with JPMorgan, Bank of America and Wells Fargo 😱), reports its full year results for 2023. It's going to be interesting, and not just because Citi already divulged that it's set aside $1.3bn to cover currency risks in Argentina and losses in Russia, but because more details will likely emerge about the progress of project "Bora Bora", under which Citi is stripping out layers of management, and - among other things - closing its municipal bond trading and distressed debt businesses. 

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Something needs to be done. This Wednesday's release was a reminder that returns in Citi's markets business were 8% in the third quarter, which was at least better than the 3.5% from the banking division and 3.1% from the wealth division. Only the services business, which includes treasury and trade solutions and securities is looking good, with returns of 23%. 

Bloomberg points out that Citi has been here before. Current CEO Jane Fraser's cost-cutting plan is a continuation of the cost-cutting plans of her predecessors: Vikram Pandit and Michael Corbat both trimmed tens of thousands of jobs, but in the context of Citi's 240k+ headcount, it made little difference. 

Some people are confident that Fraser can be the CEO that conquers the mountain. Mike Mayo has proclaimed that he's a Fraser fan and thinks Citi's share price could double in three years, while acknowledging that “history is not on Citi’s side to effectively execute.” Others are not so sure. Citi wants to increase its revenues by between 4-5% on average in the coming years. One analyst says this is unlikely:  “It’s punchy for JPMorgan. It’s aggressive for any bank, not just Citi, especially with rates having peaked.”

Separately, Goldman Sachs said it wanted to be the number one in equities trading, and it is. Bloomberg reports that Goldman is likely to have trumped Morgan Stanley when it reports its equities trading revenues next week. 

Ashok Varadhan, who runs Goldman's equities business, says people who work on Wall Street have, "Type A personalities who want to win" and that Goldman sorts are therefore very proud of having trounced Morgan Stanley.  The trouncing is the result of focusing more heavily on big hedge fund clients and quant firms who were previously wary of the firm. In the words of Goldman COO John Waldron, they were not "hugging" the firm "on the first day." Now, they presumably are. 

Four particularly alpha Goldman males are credited with driving the equities turnaround: the ubiquitous Marc NachmannKevin Kelly and Cyril Goddeeris who run financing (prime broking) and Jack Sebastian in sales. Goldman might want to give them a hug in return.

Meanwhile...

Cuts are back in the technology industry, which might interest banks trying to hire developers. Amazon is cutting 500 people (35% of the staff) from Twitch. (Bloomberg) 

Google is laying off hundreds of people from its digital assistant, hardware and engineering teams. (Bloomberg) 

Barclays is establishing an energy transition team with 100 bankers. It will be led by Mike Cormier in the US. (Bloomberg) 

James Gorman can retire peacefully; Morgan Stanley will pay $200m-$300m to settle its block trading probe. (Bloomberg) 

Over the past year, remote workers were promoted 31% less frequently than people who worked in an office, either full-time or on a hybrid basis. (WSJ) 

Broadridge has launched OpsGPT, a chat-bot that uses generative AI and large language model technology to analyze and resolve operational issues such as failed trades. (Bloomberg) 

Crispin Odey received £29m from Odey Asset Management before he resigned. (The Times) 

Executive assistants are listening. “There are a lot of things that I have heard or seen but can’t divulge,” says Suzy Dichairo, an executive assistant for 20 years. “So-and-so is cheating on their spouse—that type of scenario.” So are IT servicedesk staff. (WSJ) 

this well are hugely valued by the business," he says.

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AUTHORSarah Butcher Global Editor

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