By Elisa Martinuzzi, Lananh Nguyen and Tatiana Bautzer LONDON/NEW YORK, Dec 17 (Reuters) - ​The U.S. Federal Reserve has told ‌Citigroup that it has closed formal notices requiring ‌the bank to fix trading risk management weaknesses, according to people with knowledge of the matter, a significant step in ⁠improving oversight and ‌control deficiencies that have bogged down the third largest U.S. ‍bank. The Fed in late 2023 issued Citi notices to address three so-called Matters Requiring Immediate ​Attent ...

The U.S. Federal Reserve has told Citigroup that it has closed formal notices requiring the bank to fix trading risk management weaknesses, according to people with knowledge of the matter, a significant step in improving oversight and control deficiencies that have bogged down the third largest U.S. bank. ...

Core Viewpoint - Citigroup, Inc. is expected to see a significant increase in investment banking fees in the fourth quarter of 2025, driven by strong momentum in mergers and acquisitions and capital markets activity [1][2][9]. Group 1: Investment Banking Performance - Citigroup anticipates a mid-20% year-over-year increase in investment banking fees for Q4 2025, supported by ongoing deal-making and capital markets activity, particularly mega deals and investment-grade transactions [2][9]. - In Q3 2025, Citigroup's investment banking revenues grew by 23% year-over-year, attributed to active capital markets, a resurgence in M&A, increased IPO issuance, and strong client engagement [3]. - The bank's strategic initiatives, including business simplification and focusing on high-growth areas, are expected to enhance its ability to capture complex, high-value transactions, thereby reinforcing fee income momentum [4]. Group 2: Market Context and Competitors - Other major firms, such as JPMorgan and Morgan Stanley, are also experiencing growth in investment banking revenues, with JPMorgan's fees rising 12.3% year-over-year to $7.3 billion in the first nine months of 2025, and Morgan Stanley's revenues increasing by 15% to $5.2 billion in the same period [5][6][7]. - Despite the strength in investment banking, Citigroup's market revenues are projected to decline in the low-to-mid single digits year-over-year for Q4 2025 [2][9]. Group 3: Stock Performance - Citigroup's shares have increased by 63.3% over the past year, outperforming the industry growth of 38.7% [8].

Core Insights - America's largest banks are projected to end 2025 with historic stock prices, strong balance sheets, and regulatory freedom, attracting attention from investors in banking ETFs [1] Group 1: Bank Performance - JPMorgan Chase stock is showing an upward trend, with bank stocks outperforming other market stocks [2] - The KBW Bank Index (BKX) has increased by 30% year-to-date, surpassing the S&P 500 Index, with JPMorgan, Bank of America, and Wells Fargo reaching record levels, while Citigroup exceeded its book value for the first time in seven years [3] - Analysts expect large banks to continue outperforming in the coming year, with more upside than previously anticipated [4] Group 2: ETF Performance - Bank ETFs, such as the State Street Financial Select Sector SPDR ETF, Invesco KBW Bank ETF, and State Street SPDR S&P Bank ETF, have rallied between 14% and 30% this year due to strong performance from large lenders [5] Group 3: Earnings and Capital Markets - Performance is increasingly driven by earnings growth and deal-making momentum rather than interest-rate bets [6] - Global investment banking volumes are expected to increase by 10% year-over-year, the highest since 2021 [7] - Despite earlier fluctuations and IPO postponements, trading revenues for major banks are forecasted to reach record levels in 2025, with net income also expected to hit a record high [8] Group 4: Deregulation and Capital Deployment - Deregulation is changing the investment landscape for bank ETFs, with American banks projected to deploy $180 billion to $200 billion in excess capital by year-end due to policies from the Trump administration [10] - This capital is expected to be allocated towards stock repurchases, technology investments, and mergers, benefiting bank-focused ETF portfolios [10] Group 5: Profitability Targets - Major banks are setting ambitious profitability targets, with Bank of America aiming for a return on tangible common equity (ROTCE) of 16% to 18%, and Wells Fargo targeting 17% to 18% [11] - JPMorgan plans to invest an additional $10 billion in 2026 to enhance credit cards, branches, employee compensation, and AI initiatives [12] Group 6: Implications for ETF Investors - Bank ETFs are evolving from being interest-rate-sensitive investments to being linked to capital markets, mergers, acquisitions, and business growth [13] - Analysts suggest that with deregulation and expansion plans, financial ETFs may be entering a new cycle focused on capital allocation rather than mere survival [13]

Group 1 - The core viewpoint of the article emphasizes the market analysis of Rtx Corp., highlighting its investment potential and market positioning [1] Group 2 - The article discusses Rtx Corp.'s recent financial performance, including revenue growth and profit margins, indicating a strong market presence [1] - It provides insights into the competitive landscape, detailing how Rtx Corp. compares with its peers in terms of market share and innovation [1] - The analysis includes projections for future growth, suggesting that Rtx Corp. is well-positioned to capitalize on emerging market trends [1]

Citi has been shrinking its international consumer banking franchise for nearly five years as part of CEO Jane Fraser's plan to refashion the megabank into a smaller, simpler company. Processing ContentThe latest milestone in that process came Monday, when Citi announced the completion of the sale of a 25% stake in Grupo Financiero Banamex, its retail banking subsidiary in Mexico. Selling one-quarter of Banamex to Mexican businessman Fernando Chico Pardo is "a very significant part and step" in the bank's ...

Core Insights - Citigroup has entered a multi-year strategic partnership with LSEG to enhance its data capabilities across global operations [1][2] - The collaboration aims to standardize data access and governance, improving operational efficiency and data-driven decision-making [2][5] Data and Analytics Partnership - The agreement will deploy LSEG's data, analytics, and workflow tools across various functions including markets, investment banking, wealth, trading, and risk [2] - LSEG will provide curated, AI-ready datasets covering pricing, market data, benchmarks, indices, company data, deals information, and commodities [3][4] Technology Modernization - Citi is undergoing a broader modernization of its technology infrastructure, targeting stronger consistency in data-driven decisions [2] - The integration of LSEG Workspace into Citi's workflows will enhance real-time and historical data delivery [4] Compliance and Risk Management - The partnership will enhance compliance and risk management through LSEG's World-Check data, improving auditability and consistency across regions [5] - High-quality data is emphasized as crucial for delivering better client experiences and faster insights [5][6]

Group 1: Citigroup Inc. (NYSE:C) - Joseph M. Terranova, senior managing director for Virtus Investment Partners, expressed a positive outlook on Citigroup [1] - JPMorgan analyst Vivek Juneja upgraded Citigroup from Neutral to Overweight and raised the price target from $107 to $124 [1] - Citigroup shares gained 0.9% to close at $112.80 on Monday [3] Group 2: Leidos Holdings, Inc. (NYSE:LDOS) - Leidos appointed Theodore "Ted" Tanner Jr. as its new chief technology officer, indicating a focus on AI [2] - Citigroup analyst John Godyn initiated coverage on Leidos Holdings with a Buy rating and set a price target of $218 [2] - Leidos shares dipped 1.8% to settle at $185.95 during the session [3] Group 3: iShares U.S. Industrials ETF (NYSE:IYJ) - Shannon Saccocia, chief investment officer of NB Private Wealth, named iShares U.S. Industrials ETF as her final trade [2] - iShares U.S. Industrials ETF rose slightly by 0.02% during the session [3]

Group 1 - Citi's investment management unit head, Rob Jasminski, has joined BlackRock to oversee a nearly $80 billion portfolio for wealth management clients [1] - Jasminski will be accompanied by a team from Citi's investment management unit, and Kerry White will succeed him as head of Citi Investment Management [2] - Citi will continue to provide advice and support to its private banking clients previously managed by the investment management unit [2] Group 2 - BlackRock will design and implement portfolio strategies, and Citi will introduce BlackRock's Aladdin Wealth platform to its investment staff and private bankers [3] - Citi has completed the sale of approximately 25% of its equity stake in Grupo Financiero Banamex to a company owned by Fernando Chico Pardo and his family [3][4] - Fernando Chico Pardo will assume the role of Chair of Grupo Financiero Banamex following the transaction, which has received regulatory approval [4] Group 3 - The divestment of Banamex aligns with Citi's strategic priorities and allows the company to focus on its institutional business in Mexico [5] - Citigroup has appointed Tobias Akermark and Kasper Dichow to co-lead its Nordic investment banking division [5]

Group 1: Home BancShares and M&A Activity - Home BancShares announced plans to acquire Mountain Commerce Bancorp, valued at $1.8 billion, marking its return to the M&A arena after nearly four years [4][5] - CEO John Allison expressed openness to additional deals, indicating a strong capital position with a "war chest of capital" [5] - The previous acquisition of Happy State Bank was initially seen as successful but led to a legal battle due to employee departures, which has since been resolved [6][8][9] Group 2: OpenAI and Generative AI in Banking - OpenAI's CEO Sam Altman is focusing on the banking sector, hiring former employees from major banks to develop AI tools aimed at replacing entry-level investment banking tasks [12][13] - The project, codenamed Mercury, aims to enhance efficiency in transaction types, posing potential risks to anti-fraud measures in the banking industry [11][14] Group 3: Coinbase and Partnerships - Coinbase, the largest U.S. cryptocurrency exchange, is expanding its services through partnerships with major banks like JPMorganChase and PNC, facilitating easier crypto transactions for their clients [16][18] - The company aims to become a comprehensive trading platform, potentially allowing trades of various asset types, including loans and real estate [19][20] Group 4: Regulatory Changes and Leadership - Scott Bessent, the Treasury Secretary, is advocating for a deregulatory agenda, focusing on reducing compliance burdens for community banks and altering supervisory practices [23][24] - Michelle Bowman, Vice Chair for Supervision at the Federal Reserve, is implementing a deregulatory shift, modifying how banks are examined and potentially changing oversight tools [26][28] Group 5: Capital One and Discover Acquisition - Capital One's acquisition of Discover Financial Services is seen as a long-term bet to enhance its payments network, with shares up approximately 40% since regulatory approval [46][47] - The integration process is expected to be complex, with potential short-term impacts on loan growth as the company adjusts Discover's portfolio [48][49] Group 6: Citi's Transformation Under Jane Fraser - Citi, under CEO Jane Fraser, is undergoing significant transformation, focusing on profitability and operational efficiency, with a target return on tangible common equity of 10%-11% for 2026 [52][54] - Fraser's leadership has led to improved financial results and a restructuring of the bank's operations, positioning Citi as a more competitive entity [53][55] Group 7: Stripe and AI Innovations - Stripe, co-founded by the Collison brothers, is leveraging AI and digital assets to enhance its payment solutions, including a partnership with OpenAI for Instant Checkout in ChatGPT [34][36] - The company's valuation has rebounded to over $90 billion, with processing volumes reaching $1.4 trillion, indicating strong market confidence [36] Group 8: Wells Fargo's Strategic Focus - Wells Fargo, led by CEO Charlie Scharf, is aiming to grow its credit card and investment banking businesses, with credit card revenue up 8% year-over-year [108][110] - The bank is positioning itself to compete more effectively with larger institutions, potentially resembling JPMorgan's business model by the end of 2026 [111] Group 9: Regulatory Environment and Political Influence - The current political landscape, influenced by President Trump and key figures like Congressman French Hill, is shaping banking regulations, including stablecoin legislation and deregulatory efforts [72][116] - The FDIC, under acting chair Travis Hill, is expected to continue a trend of lighter supervision, focusing on risk-based regulatory approaches [75][77]