Citi Turns 200: Expansion Plans for Bank Abroad
July 06, 2012 09:00 AM
In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog. The 16th installation below covers how National City Bank planned for additional expansion abroad. Read the 15th installment on how National City Bank sought out to find a new look post World War II, here.
Expansion plans for bank abroad
Overseas employee conferences become the key to changing attitudes, as George Moore presses for "new offices everywhere"
In 1956, First National City Bank chairman Howard Sheperd summoned national division chief George Moore to his office. Sheperd and president James Stillman Rockefeller were preparing for a board meeting. The chairman told Moore that he, Moore, was to succeed Leo Shaw, the senior vice president who had run the overseas division since 1946. "Leo thinks you will foul up but we don't," he said. "Go ahead and do what you've said has to be done."
George Moore had made a study of the overseas division. He recommended "new offices everywhere," especially in Europe, and new strategies for branches in Latin America and Asia. The bank should also start hiring new people. "In brief, my message was, 'Hey fellas - there's a whole new world out there. The war's over. City Bank hasn't recognized it yet. Fortunately, nobody else has either.' "
Moore wanted to move fast. "Every year you delayed could cost you a fortune," he said. "Not everybody recognized that, because you never made much of a profit out of the first year of a new branch - you were lucky if you got back your expenses. But if you were right, you might be making $5 million a year out of that branch in the tenth year. What you were losing if you delayed wasn't the trivial profits of the first year (if any) but a year's worth of that five million." He adopted a new strategy, using the time it took to get approvals and rent space, to let customers elsewhere in the world know that the bank was planning to open a branch in a particular city. Customers would be told of the latest progress, and a big party would be held on opening day. By the time the doors finally opened, "it wasn't uncommon to do 200 transactions of some size the first day."
On his first afternoon in the new job, Moore called a meeting of all the senior overseas officers based in New York. He was not overly impressed - many of them were nearing retirement, and there had been relatively little fresh recruitment for some time. New thinking was required. "The problem with the organization of the overseas division was that the branches had too much procedural autonomy and too little freedom to make banking decisions."