Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s

Posted: 9 Apr 2012

See all articles by Julie Wulf

Julie Wulf

Harvard Business School

Ian McKown Cornell

Harvard University - Business School (HBS)

Date Written: March 13, 2012

Abstract

As the commercial real estate market began to crash in early 1990 heavily exposed banks like Citibank and Chase Manhattan were left largely undercapitalized. John Reed, Citibank Chairman and CEO, was caught off guard by the sudden market plunge. While Reed struggled to maintain the capital reserve of us his bank further weaknesses within Citi began to emerge. In addition, to missing the coming of the real estate crisis Citi had had poorly managed internal operations, overvalued acquisitions and grown heavy from organizational excess. The poor management left Citi in the care of Federal Regulators, worried about the banks solvency. The case examines the roots of these problems and the steps taken by Reed to return the bank to a well-managed and stable institution.

Learning Objective: The case discusses the strategic challenges faced by Citi Bank in the early 1990s. The case allows students to identify the factors that lead to Citi's decline and assess Reed's performance in the turnaround. The case also introduces students to the border issues of commercial real estate and the crisis of the early 1990s. The case is appropriate for courses in strategy and organizational leadership.

Suggested Citation

Wulf, Julie M. and McKown Cornell, Ian, Citibank: Weathering the Commercial Real Estate Crisis of the Early 1990s (March 13, 2012). Harvard Business School Strategy Unit Case No. 712-446, Available at SSRN: https://ssrn.com/abstract=2037394

Julie M. Wulf (Contact Author)

Harvard Business School ( email )

Harvard Business School
Boston, MA
United States

Ian McKown Cornell

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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