Citi plans to launch crypto trading services after a boom in client interest in digital currencies, report says

Citi trader

Citi could be the next major bank to enter the digital currency market after surging client interest, the Financial Times reported on Friday.

With Goldman Sachs and JPMorgan warming up to cryptocurrencies, other large investment banks are having to look at making them more accessible to the public.

Itay Tuchman, Citi’s global head of foreign exchange, told the FT services including trading, custody, and financing are under consideration right now.

“There are different options from our perspective, and we are considering where we can best service clients,” he told the newspaper. “This is not going to be a prop-trading effort,” he said, referring to proprietary trading, which uses money from the bank’s own capital.

Citi published a research report on bitcoin in March that said the digital asset could become the currency of global trade. At the same time, the bank suggested it could go either way and suffer a “speculative implosion.”

Goldman Sachs on Thursday opened up a new way for Wall Street investors to place big bets in the popular cryptocurrency through non-deliverable forwards, a derivative tied to bitcoin’s price that is paid out in cash.

Tuchman said Citi has seen massive interest in bitcoin across a gamut of investors, including large asset managers. Some had requested for more research, while others wanted trading services and ways to finalize deals with cryptocurrencies.

But he said the bank is being cautious and shouldn’t do anything that’s not safe, or sound. It is reportedly in no rush to conclude how deeply involved it should be in crypto. “We will jump in when we are confident that we can build something that benefits clients and that regulators can support,” he said.

“I don’t have any FOMO [fear of missing out], because I believe that crypto is here to stay and that we are just at the very beginning of the market,” he added. “This isn’t a space race. There is room for more than just one flag.”

Citi declined to comment further on the FT’s report.

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I got a tour of Citi’s new wealth hub in Singapore for high-net-worth clients, a 30,000-square-foot space with ‘garden pods’ for meetings. Look inside.

singapore citi wealth hub
The space features “garden pods” for meetings.

  • I toured Citi’s new wealth hub in Singapore for its high-net-worth clients.
  • It was designed to cater to clients with assets starting at 250,000 Singapore dollars, or about $186,000.
  • It felt more like an upscale lounge than a bank. It was full of trees, a free café, and “garden pods” for meetings.
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Global investment bank Citi has opened a 30,000-square-foot wealth hub on Singapore’s Orchard Road, the city-state’s glitzy luxury shopping thoroughfare.

singapore citi wealth hub

The Citi Wealth Hub on Orchard Road, Citi’s largest wealth hub globally, was created to cater to the bank’s Citigold and Citigold Private Clients, who must have at least 250,000 Singapore dollars ($186,000) and SG$1.5 million ($1.1 million) in investable assets respectively. 

The idea is to bring together Citi’s Singapore-based relationship managers and wealth specialists in a central location where they can advise these clients on building their wealth, according to a Citi spokesperson. 

While Citi doesn’t disclose its numbers of Citigold and Citigold Private Clients, there’s no shortage of wealthy potential clients in Singapore.

singapore

The city-state is home to 3,732 ultra-high-net-worth individuals, or individuals worth at least $30 million, according to Knight Frank’s 2021 Wealth Report.

In the 2021 Global Financial Centres Index that ranks global financial centers, Singapore ranked fifth overall after New York, London, Shanghai, and Hong Kong.

“Citi has an enormous opportunity to serve the growing affluent segment in Singapore,” Brendan Carney, CEO of Citibank Singapore Limited and Global Consumer Banking, said in a statement announcing the opening of the wealth hub in December. 

I recently got a tour of the Citi Wealth Hub, which spans 30,000 square feet across four floors. The seventh floor is dedicated to the Citigold Centre for Citigold clients, who must have at least SG$250,000 ($186,000) in assets.

singapore citi wealth hub

Clients are greeted by a sleek reception area with fresh flowers. Like everywhere else in Singapore right now, everyone is required to check in with contact tracing app Trace Together.

The Citigold Centre is a large glass-walled atrium with meeting pods, a cafe, and an abundance of greenery.

Singapore citi wealth hub

Ministry of Design, the interior design firm responsible for the space’s biophilic design, refers to the atrium as a “Banking Conservatory.”

It certainly didn’t feel like any bank I’d been in before.

singapore citi wealth hub

Instead of tellers or conventional meeting rooms, there are “garden pods” where clients can meet with their wealth managers.

Each pod is set up with a round table, four chairs, and a screen where a relationship manager can advise the client using a larger screen instead of a laptop or tablet.

singapore citi wealth hub

Source: Citi

A free cafe serves Lavazza coffee, TWG tea, and chocolate bon bons from local pastry chef Janice Wong.

singapore citi wealth hub

Source: Citi

And there are other nooks throughout where clients can meet with their relationship manager or just lounge with a coffee.

singapore citi wealth hub

Source: Citi

The most exclusive part of the wealth club is the Citigold Private Client Centre on the eighth floor.

singapore citi wealth hub

To become a Citigold Private Client, you must have investable assets of at least SG$1.5 million, or about $1.1 million. 

These clients gain access not only to the wealth hub in Singapore, but to a dedicated relationship manager who consults with a team of specialists, including portfolio counselors and mortgage specialists, to best advise the clients.

The Citigold Private Client Centre is a smaller, intimate space, filled with small meeting nooks – and still plenty of greenery.

singapore citi wealth hub

Source: Citi

From this area, Citigold Private Client members can order something from the cafe with one of the staff and have it delivered to them.

singapore citi wealth hub

Source: Citi

The wealth hub has 30 client advisory rooms that are named after national trees and flowers of countries where Citi has a presence.

singapore citi wealth hub

Source: Citi

The Citi employees who work at the wealth hub occupy the sixth floor.

singapore citi wealth hub

Plastic dividers separate individual workspaces in the plant-filled office.

The wealth hub can house more than 300 relationship managers and wealth specialists, but in Singapore, only 75% of a company’s employees are currently allowed to be in the office at one time.

singapore citi wealth hub

Source: The Straits Times

My tour of the Citi Wealth Hub made it clear that the luxe space was designed for a world where in-person meetings and events were the norm.

singapore citi wealth hub

During my tour, the Citi spokesperson emphasized that the wealth hub was meant to bring clients together with their relationship managers and wealth specialist for in-person rather than online meetings.

The initial plan was also to hold seminars and talks with business leaders, according to the Citi spokesperson. Right now, the only events are online.

In the pandemic, people have grown more accustomed than ever to virtual meetings, and in-person events have become much more limited.

Still, Singapore is likely closer to a return to in-person normalcy than most other countries, as the city-state has contained the virus and reported only 30 deaths throughout the pandemic.

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Citi is reportedly blocking debt deals with firms that kept the bank’s accidental $500 million payout

citi bank branch
  • Citigroup is blocking investment firms that wouldn’t return an accidental Revlon wire from future debt offerings led by the bank, according to a Bloomberg report.
  • Citi accidentally transferred nearly $900 million to Revlon lenders last year when it meant to transfer only $8 million.
  • A judge ruled last month that Citi can’t recoup the $500 million 10 investment firms refused to send back.
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A botched debt repayment by Citigroup is now being used by the bank as reason to block certain investment firms from future debt offerings, according to a report from Bloomberg.

In what is considered to be “one of the biggest blunders in banking history,” Citigroup accidentally sent nearly $900 million to Revlon lenders last year when it meant to only send about $8 million.

While some firms returned the money to Citigroup, others didn’t, with 10 investment firms holding onto more than $500 million of the nearly $900 million accidental payment. A federal judge ruled last month that those investment firms do not have to return the money to Citigroup. Citigroup is appealing the decision.

Now, Citigroup is retaliating by blocking these 10 lenders from participating in certain debt offerings led by the bank, Bloomberg reported, citing people with knowledge of the matter. The investment firms targeted by Citigroup include Brigade Capital Management, HPS Investment Partners, and Symphony Asset Management, according to the report.

It’s unclear whether the retaliation by Citigroup will be a big blow for the targeted firms, but it’s hard to avoid Citigroup in debt markets given that it is one of the largest underwriters of new bonds and loans, according to Bloomberg.

However, the targeted firms can still participate in debt offerings led by Citigroup if the issuer specifically requests for their participation, Bloomberg reported.

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Citi says bitcoin could become the currency of global trade in a ‘massive transformation’ – or it could implode

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Citi said bitcoin is at a “tipping point.”

  • Bitcoin could be at the start of a “massive transformation” into the mainstream of finance, Citi said.
  • The bank said it could even become central to global trade if innovation and adoption continues.
  • Yet it said bitcoin is at a “tipping point” and could implode if investors go off the technology.
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Bitcoin could be at the start of a “massive transformation” into the mainstream of finance, a major report from Citi has said, and could even become the currency of global trade.

However, Citi analysts said bitcoin is at a “tipping point” and could also suffer a “speculative implosion”. They said improvements to cryptocurrency systems would be needed to drive wider adoption, and said increased regulation could drive away some of the most innovative players.

In a 108-page deep-dive into cryptocurrencies, Citi said there had been a major change in bitcoin from “primarily a retail-focused endeavor to something that looks attractive for institutional investors” as they search for higher returns and alternative assets.

Citi’s analysts speculated that a rise in other bitcoin-like products – such as private “stablecoins” and central bank digital currencies – would add legitimacy to the crypto world, while making such technologies easier to use and more integrated into economies.

“In this scenario, bitcoin may be optimally positioned to become the preferred currency for global trade,” a team of Citi analysts led by Sandy Kaul, global head of Citi’s business advisory services, said. in a report.

“It is immune from both fiscal and monetary policy, avoids the need for cross-border foreign exchange (FX) transactions, enables near instantaneous payments, and eliminates concerns about defaults or cancellations as the coins must be in the payer’s wallet before the transaction is initiated.”

The report highlighted increased acceptance of cryptocurrencies by companies such as PayPal, Mastercard and Tesla, and said bitcoin’s scarcity means investors are increasingly comparing it to “digital gold.”

These developments have helped drive the price of bitcoin up more than 400% over the last year, although it sank more than 20% last week. The bitcoin price (BTC) stood at around $47,800 on Monday.

Yet Citi said there were a number of “obstacles and challenges” to be overcome, and said there would have to be “upgrades in the way the marketplace works.” For example, big investors would want more guarantees on safety and for the market to be more efficient before they pile in, the bank said.

The bank’s report also said increased acceptance of bitcoin would bring about more regulation, which could drive away some of the most innovative players.

“Many of the most innovative and talented developers may choose to withdraw from established platforms deploying more extensive oversight and monitoring. This could end up dividing the liquidity in the system.”

Citi said bitcoin’s future is “unknowable”. But it added: “Developments in the near term are likely to prove decisive, as the currency balances at the tipping point of mainstream acceptance or a speculative implosion.”

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