Citibank

Citibank is the consumer division of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York. The United States is the largest single market with approximately 26% of branches, generating 51% of revenues. Citibank's 983 North American branches are concentrated in major metropolitan areas including New York City, Chicago, Los Angeles, San Francisco, Washington, D.C., and Miami. Latin America markets make up 25% of revenues, Asia 20%, and Europe / Middle East / Africa 4%.^[1]

In addition to standard banking transactions, Citibank markets insurance, credit cards, and investment products. Their online services division is among the most successful in the field,^[2] claiming about 15 million users.

As a result of the global financial crisis of 2008–2009 and huge losses in the value of its subprime mortgage assets, Citibank was bailed out by aid from the U.S. government. On November 23, 2008, in addition to initial aid of $25 billion, a further $25 billion was invested in the corporation together with guarantees for risky assets amounting to $306 billion.^[3] Since this time, Citibank has repaid its government loans in full,^[4] resulting in a net profit for the U.S. government.

The City Bank of New York was founded on June 16, 1812. The first president of the City Bank was the statesman and retired Colonel, Samuel Osgood.^[5] Ownership and management of the bank was taken over by Moses Taylor, a protégé of John Jacob Astor and one of the giants of the business world in the 19th century. During Taylor's ascendancy, the bank functioned largely as a treasury and finance center for Taylor's own extensive business empire.^[6]

In 1863, the bank joined the U.S.'s new national banking system and became The National City Bank of New York. By 1868, it was one of the largest banks in the United States, and in 1897, it became the first major U.S. bank to establish a foreign department.

When the Federal Reserve Act allowed it,^[7] National City Bank became the first U.S. national bank to open an overseas banking office when it opened a branch in Buenos Aires, Argentina, in 1914. Many of Citi's present international offices are older; offices in London, Shanghai, Calcutta, and elsewhere were opened in 1901 and 1902 by theInternational Banking Corporation (IBC), a company chartered to conduct banking business outside the U.S., which was forbidden to U.S. national banks. In 1918, IBC became a wholly owned subsidiary and was subsequently merged into the bank. By 1919, the bank had become the first U.S. bank to have $1 billion in assets.^[8]

Charles E. Mitchell was elected president in 1921 and in 1929 was made chairman, a position he held until 1933. Under Mitchell the bank expanded rapidly and by 1930 had 100 branches in 23 countries outside the United States. The policies pursued by the bank under Mitchell's leadership are seen by historical economists as one of the prime causes of the stock market crash of 1929, which led ultimately to the Great Depression.^{[citation needed]} In 1933 a Senate committee, the Pecora Commission, investigated Mitchell for his part in tens of millions of dollars in losses, excessive pay, and tax avoidance. Senator Carter Glass said of him: "Mitchell, more than any 50 men, is responsible for this stock crash."^[9]

On December 24, 1927, its headquarters in Buenos Aires, Argentina, were blown up by the Italian anarchist Severino Di Giovanni, in the frame of the international campaign supporting Sacco and Vanzetti.^[10][11]

In 1952, James Stillman Rockefeller was elected president and then chairman in 1959, serving until 1967. Stillman was a direct descendant of the Rockefeller family through the William Rockefeller (the brother ofJohn D.) branch. In 1960, his second cousin, David Rockefeller, became president of Chase Manhattan Bank, National City's long-time New York rival for dominance in the banking industry in the United States.^{[citation needed]}

Following its merger with the First National Bank in 1955, the bank changed its name to The First National City Bank of New York, then shortened it to First National City Bank in 1962.

The company organically entered the leasing and credit card sectors, and its introduction of US dollar denominated certificates of deposit in London marked the first new negotiable instrument in the market since 1888. Later to become part of MasterCard, the bank introduced its First National City Charge Service credit card – popularly known as the "Everything Card" – in 1967.^[12]

In 1976, under the leadership of CEO Walter B. Wriston, First National City Bank (and its holding company First National City Corporation) was renamed Citibank, N.A. (and Citicorp, respectively). By that time, the bank had created its own "one-bank holding company" and had become a wholly owned subsidiary of that company, Citicorp (all shareholders of the bank had become shareholders of the new corporation, which became the bank's sole owner).

The name change also helped to avoid confusion in Ohio with Cleveland-based National City Bank, though the two would never have any significant overlapping areas except for Citi credit cards being issued in the latter National City territory. (In addition, at the time of the name change to Citicorp, National City of Ohio was mostly a Cleveland-area bank and had not gone on its acquisition spree that it would later go on in the 1990s and 2000s.) Any possible name confusion had Citi not changed its name from National City eventually became completely moot when PNC Financial Services acquired the National City of Ohio in 2008 as a result of the subprime mortgage crisis.

Automated banking card[edit]

Shortly afterward, the bank launched the Citicard, which allowed customers to perform all transactions without a passbook. Branches also had terminals with simple one-line displays that allowed customers to get basic account information without a bank teller. When automatic teller machines (ATMs) were later introduced, customers could use their existing Citicard.^{[citation needed]}

Credit card business[edit]

In the 1960s the bank entered into the credit card business. In 1965, First National City Bank bought Carte Blanche from Hilton Hotels. Three years later, the bank (under pressure from the U.S. government) sold this division. By 1968, the company created its own credit card. The card, known as "The Everything Card", was promoted as a kind of East Coast version of the BankAmericard. By 1969, First National City Bank decided that the Everything Card was too costly to promote as an independent brand and joined Master Charge (now MasterCard). Citibank unsuccessfully tried again in 1977–1987 to create a separate credit card brand, the Choice Card.

John S. Reed was selected CEO in 1984, and Citi became a founding member of the CHAPS clearing house in London. Under his leadership, the next 14 years would see Citibank become the largest bank in the United States, the largest issuer of credit cards and charge cards in the world, and expand its global reach to over 90 countries.

As the bank's expansion continued, the Narre Warren-Caroline Springs credit card company was purchased in 1981. In 1981, Citibank chartered a South Dakota subsidiary to take advantage of new laws that raised the state's maximum permissible interest rate on loans to 25 percent (then the highest in the nation). In many other states, usury laws prevented banks from charging interest that aligned with the extremely high costs of lending money in the late 1970s and early 1980s, making consumer lending unprofitable. Currently, there is no maximum interest rate or usury restriction under South Dakota law when a written agreement is formed.