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Citigroup Europe CEO Sees U.S. Universal Banks Gaining Share
By Ambereen Choudhury & Elisa Martinuzzi - Apr 14, 2013 7:00 PM ET
Citigroup Inc. (C)’s European chief, Jim Cowles, said so-called U.S. universal banks like his own are gaining market share in investment banking because they can absorb the rising cost of regulation better than European peers.
The third-largest U.S. bank is planning to hire “several” senior investment bankers in Europe after the firm, like its U.S. counterparts, took “harder” decisions than lenders in Europe as it recapitalized after the financial crisis more than four years ago, Cowles said in an interview in London.
“There are only a handful of banks that have the size and scope to deal with the growing regulatory demands,” said Cowles, 57. “The result is likely to be consolidation of market share in the investment-banking business.”
Cowles’s support for the universal bank model, combining investment, commercial and consumer banking, contrasts with critics including JPMorgan Chase & Co. (JPM) analyst Kian Abouhossein, who argue top-tier investment banks are “uninvestable” and may be spun off by parent companies due to their regulatory burdens. In Europe, investment banks face reduced profitability from increased taxes, compensation restrictions and regulation, according to a report by Oliver Wyman and Morgan Stanley published last week.
Cowles said some universal banks may retreat to their home markets, while retaining a combination of consumer and commercial banking as well as securities businesses.
Citigroup, based in New York, reports earnings later today.