edelfenbein
DealBreaker’s Bess Levin looks at Citigroup’s (C) newest strategy, breaking into the Boston banking market.
Pardon me while I go bang my head against the wall. First off, the Boston banking market is what? Four hundred years old. I’m sorry but this is just plain silliness.
Citigroup’s strategy is that it’s a “financial supermarket.” They figure “hey, we have credit card customers with Boston addresses, so they’ll certainly buy Smith Barney mutual funds!” You can just feel the synergy!
Let’s take a step back and look at this. We’re waiting to see if a company with $2 trillion in assets can make impact its business by impressing Bostonians with having one statement for their credit cards and investments.
Please, this is secret so whatever you do, don’t tell Fidelity (or State Street or Bank of America or Merrill Lynch or anybody else with $30 in deposits).
The financial supermarket idea doesn’t work. Repeat after me, Mr. Prince, it doesn’t work. I know, it sounds good on paper, but people don’t do their finances that way. They never have and they’re not about to now. This was just a nice idea to justify some lousy acquisitions many, many years ago.
Eddy’s rule of business #15,783: No matter who is put in charge to execute a dumb idea, when it starts to fail, people will blame the execution, not the dumb idea. Lots of people are ready to toss Chuck Prince overboard. Fine, but he’s not the problem.
Twenty-five years ago, Sears bought Dean Witter. They had this great idea. Stick brokerage offices in the stores! Well, it didn’t work and Sears eventually sold Dean Witter. Later Dean Witter bought Discover and turned it into a hugely profitable credit card business. Then Morgan merged with Dean Witter, and made a whole lotta money.
Guess what Morgan is spinning off now? Discover!
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment