Lowering Valuation for Citigroup as Higher Regulatory Requirements Are Likely Additional Headwind

Citigroup has an international commercial banking franchise and a domestically focused retail banking unit. Within the bank's commercial operations (called the Institutional Clients Group, or ICG), Citi has large trading, investment banking, international corporate banking, and custody operations. ICG is Citi's most unique business unit, as its global footprint is hard to replicate. This international presence will help Citigroup remain a bank of choice for companies with cross-border needs. While this unique global presence offers some advantages, there are weaknesses as well. It is expensive and complicated to maintain, and the bank's markets desk also produces low returns. As a result, returns for ICG have been mixed.