Citigroup bets on ex-BofA exec Andy Sieg’s connections to revamp wealth unit

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NEW YORK — Citigroup Inc’s hiring of Andy Sieg, the incoming head of its wealth administration unit, underscores the lender’s ambitions within the enterprise in addition to the uphill climb it faces in gaining share in a aggressive market.

The 55-year-old government, recognized for crisscrossing the nation to go to shoppers and monetary advisers, is tasked with revamping a unit the place income fell 2% to $7.4 billion final yr. That makes the enterprise lower than half the scale of Financial institution of America Corp’s Merrill Wealth Administration arm, the $18-billion behemoth Sieg ran till he left final month.

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“It’s a tremendous aggressive trade,” mentioned Eric Compton, an fairness strategist at Morningstar. “It’s merely very exhausting to take share. One other problem is that Citi has traditionally been undersized and a little bit of a laggard within the area…particularly within the wealth enterprise the place it’s all about current relationships.”

Citi is betting on Sieg’s connections.

“We’re clearly delighted that Andy is becoming a member of,” CEO Jane Fraser instructed analysts on the financial institution’s first quarter earnings name on Friday, citing his observe document, management and information of economic merchandise and digital adoption.

“We’ll actually be taking full benefit of his experience and expertise within the U.S.”

The hiring emerged as a spotlight of Citi’s post-earnings convention name, with a number of analysts asking concerning the government and the financial institution’s plans for wealth administration. The financial institution desires to construct higher relationships with rich folks whose companies are already business shoppers, Fraser mentioned.

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Sieg will purpose to compete with corporations which have spent years beefing up in wealth. Citi is recruiting new consumer advisers on the unit, CFO Mark Mason mentioned, including to the present degree of about 3,000.

The financial institution declined to remark past its executives’ remarks on the convention name. Sieg declined to remark.

Wall Road corporations cater to ultra-wealthy shoppers by offering providers like brokerage, mortgages, property and tax planning. These actions generate extra secure revenues than unstable Wall Road operations, resembling funding banking and buying and selling, that are strongly linked to financial exercise.

In some methods, Citigroup is enjoying catchup after promoting its outdated wealth enterprise, Smith Barney, a decade in the past to Morgan Stanley, which then leaned closely into wealth administration.

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That wager paid off – Morgan Stanley’s wealth unit, led by Andy Saperstein, introduced in document income final yr. And CEO James Gorman has set an bold aim of reaching $10 trillion in consumer belongings in a number of years.

Financial institution of America will report its earnings on Tuesday, adopted a day later by Morgan Stanley.

Two years in the past, Citigroup unified its varied wealth companies right into a single group led by Jim O’Donnell that included its personal financial institution and private wealth division. Whereas Sieg is on required depart for contractual causes, O’Donnell will stay within the function after which turn out to be government vice chairman. Sieg assumes his new function in September.

Citi’s wealth division oversees about $750 billion in consumer belongings, with a powerful footprint in Asia, in contrast with Merrill’s $1.4 trillion in belongings beneath administration.

Sieg beforehand led 25,000 staff, nicknamed the “thundering herd,” after Merrill’s well-known bull brand. He joined Merrill Lynch in 1992 and had been its president since 2017, with a four-year break throughout which he labored in Citi’s wealth group from till 2009.

Merrill’s income grew about 18% to $18.1 billion final yr, in contrast with $15.3 billion on the finish of 2017, based on Financial institution of America filings. (Reporting by Lananh Nguyen and Saeed Azhar, enhancing by Deepa Babington)