In 1812, America had neither a national banking system nor a central bank. In New York, the state assembly was deeply divided between two warring factions of the Democratic Republican Party which both wanted to set up a new bank. The elder statesman Samuel Osgood was able to bring the two factions together to strike a deal in which both sides would be represented on the board of a new bank, which would be called the City Bank of New York. This bank was Citi's direct ancestor. National City Bank was chartered on June 16, 1812, and opened its doors for business on September 12, 1812.
National City Bank's opening day on Wall Street
In 1814 the bank acquired Federal Depository status, which was renewed during the Civil War; City Bank later acquired a national charter. In 1856, Moses Taylor, an importer of Cuban sugar with other Latin American trade interests became president. Under Moses and his successor (and son-in-law) Percy Pyne the bank's future direction was set, with a tradition of sound business and investment practices and a willingness to adopt an international perspective. Several years later the City Bank of New York played key role in expanding the gas lighting, coal, iron, railroad and shipping sectors in the US.
In the middle of 19th century the City Bank of New York made its first major contribution to industrial development on the global scale. In 1866, the Transatlantic Cable, the brainchild of Frederick Gisborne and Cyrus Field, who founded the New York, Newfoundland and London Electric Telegraph Company, was laid. The bank played a role in financing the Transatlantic Cable project, with National City Bank's president serving as treasurer and director of the company.
In 1891 the bank started to look proactively beyond American shores and formed a foreign department in 1897. It acquired many new clients with activities abroad and started to manage their cash flows internationally, supported by a formidable network of correspondent banks. By continuing the Moses Taylor policy of maintaining a high level of liquidity, the bank became a trusted brand, especially during financial panics of 1893 and 1907, when it enjoyed superior reserve ratios and continued to lend and receive deposits.
Laying of the Transatlantic Cable
In the beginning of 1900s investment-banking affiliate National City Company was set up under the chairmanship of James Stillman and the presidency of Frank Vanderlip. Following the passing of the Federal Reserve Act in 1913, National City Bank became the first nationally chartered bank to establish branches abroad. These early outposts in Latin America were initially set up to service the bank's American corporate clients.
The beginning of 20th century was also marked with the construction of one of the greatest engineering feats in human history, the Panama Canal. Creation of the world's largest shortcut via the Panama Canal led to a boom in global trade, the growth of world economies, the emergence of new markets and new jobs. Thirty million cubic meters of earth were removed to connect the Atlantic and Pacific oceans, today saving 15,000 ships a year from having to round the tip of South America. At the request of U.S. President Theodore Roosevelt, Citi played a central part in financing the canal's construction.
Much of National City Bank's overseas expansion after World War II took place in Europe. Postwar reconstruction was aided by the US Economic Recovery Program for Western Europe, more commonly known as the Marshall Plan. The recipients of almost $13 billion in aid were not only Allies but also the defeated Axis powers of Germany and Italy. National City Bank played an important role in the Marshall Plan by arranging commercial letters of credit for shipments to countries receiving aid.
The Panama Canal
In 1967 Walter Wriston assumed the presidency. Wriston and John Exter, a former vice president of the Federal Reserve Bank of New York, were credited with devising the negotiable certificate of deposit, which became hugely popular. Other innovations included the financing of large-scale, transformational projects, including the construction of supertankers. These ships created unprecedented links between oil suppliers and purchasers, bringing comfort and simplicity to everyday lives while changing industries and creating new markets. Citi financed the construction of Onassis' first supertanker in 1948.
Walter Wriston became chairman in 1970. His successor, 14 years later, was John Reed. For three decades, the group was headed by these two men with complementary strengths: Wriston was a master of financial ingenuity, and Reed's forte was delivery. Wriston oversaw the rebranding of First National City Bank into Citibank. He pioneered the provision of specialized services for multinational companies. Citibank become a powerful force in foreign exchange and derivatives, such as interest-rate and currency swaps. The bank also played a key role in recycling the "petrodollars" earned by oil exporters when oil prices soared in the 1970s.
The bank's back-office operations were revolutionized under Reed, who also oversaw the bank's entry into retail banking on a vastly greater scale than before. Although it was costly to set up, the global consumer business, established in 1975, became a vital pillar of the group. Private banking was moved from the investment banking division to the retail division, where it soon flourished. It was under Reed that Citi became the world's largest card issuer. At the same time, Reed tied together different businesses into what came to be known as Global Transactions Services (GTS), one of Citi's strongest businesses.
Citicorp Center in skyline, taken from Long Island City, 1980s
The year 1998 saw a merger with Travelers Group that created a new entity, Citigroup, with retail, corporate, private, and investment banking under one umbrella. Under the chairmanship of Sanford I. (Sandy) Weill and his successor Charles O. (Chuck) Prince, in the early years of the 21st century, Citigroup embarked on significant global expansion.
After expanding its footprint in Europe through the purchase of one of Britain's oldest investment-banking houses, the company carried out a series of mergers and acquisitions, building strategic partnerships in Mexico, Korea, Poland, China, Turkey, Chile, and Central America. The global footprint in dozens of emerging economies served Citi well as it weathered financial storms emanating from some of the more established markets.
Today Citi is a leading global financial services company and has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
You can find out more about global Citi history with the help of Citi Interactive Timeline which contains a collection of nearly 300 company's stories and events.