If you're thinking of working for Citi's Institutional Clients Group (its investment bank), today's second quarter results for the U.S. bank suggest there is one place you should target: credit trading. Citi's credit trading business is having a frankly epic year.
Just how epic is illustrated by the chart below. Something special happened in Citi's 'spread products' (credit) business in the second quarter. Revenues increased by over 40% compared to the prior year period.
This big increase in revenues in Citi's credit trading business helped offset a 5% reduction in revenues in the bank's bigger macro trading unit. In the first half of 2019 as a whole, macro trading revenues at Citi were down 4% compared to 2018; credit revenues were up 26%. Citi's credit trading business is growing faster than any other area of the bank.*
Citi's credit trading business was outside the top three in 2018 according to Coalition; it ranked somewhere between four and six. At this rate, that could change.
Today's results are an insight into life inside Citi following the retirement of Jamie Forese as head of the institutional clients group in April 2019. Paco Ybarra, who was previously head of markets, is now the head of all of ICG. The credit trading business is run by Carey Lathrop, managing director who's been at Citi for over twenty years.
While Citi's' credit traders have had a good quarter, Ybarra might want to focus his efforts on areas like equities trading for the rest of 2019. Citi has invested heavily in equities trading in recent years, but revenues there appear to be in persistent decline. In the first half of this year, Citi's equities revenues fell 17% compared to the same period of 2018.
(* One analyst suggests Citi's credit trading results are simply the result of the $355m gain on their Tradeweb investment (originally made in Apr-08). "Citi's not clear about where exactly they booked this, but reading thru the commentary, I got the feeling that they booked this in FICC and, when I saw the jump in Credit & Other (which was not accompanied by the management saying wow we had great results), I figured that's where they might have booked it," he says.)
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