Banking: First National’s Full House

The world’s busiest bank has, in the past five years, doubled its number of branches (to 278), almost doubled its loans (to $7.9 billion), and ventured into such sidelines as equipment-leasing and factoring, a fairly risky form of finance in which loans are made against accounts receivable. Such expansion and diversification enabled Manhattan’s 153-year-old First National City Bank last June to pass its archrival, the Chase Manhattan, and become the nation’s second largest bank. With assets of $13.8 billion, it now ranks behind only California’s Bank of America, which has $15.9 billion.

Conrad’s Comrade. The “Citibank,” as moneymen call it, last week dealt into another fast-growing business: credit cards. For $12 million, it will buy control of Hilton Hotels’ profitable Carte Blanche, which bills $90 million a year. In a complex pact, Hilton and Citibank each will own half of Carte Blanche, but the bank will hold all the voting stock. Hilton figures that Citi bank’s worldwide outlets will help Carte Blanche trump the two leaders in the field, American Express and Diners’ Club. Moreover, Citibank is strong in the eastern U.S., and Carte Blanche is now popular mostly in the West.

Citibank’s strategy is to emulate the success of American Express by marketing its traveler’s checks to holders of its credit cards, and vice versa. In addition, it will try to sell its banking services to many of the 450,000 Carte Blanche cardholders, and to introduce the credit card to its own 566,000 checking-account customers. It is even talking about a companion “Carte Bleue” that New Yorkers might use In neighborhood stores. What the bank aims for is a fully rounded financial service, in which a customer can save, borrow and charge everything from hospital care to trips abroad.

Respect in Russia. The two big figures in Citibank’s success are Chairman James Stillman Rockefeller—grand-nephew of John D. Rockefeller Sr., third cousin to Chase Manhattan President David Rockefeller—and President George S. Moore. Chief Executive Rockefeller, 63, theoretically presides over high policy, while Moore, 60, runs day-to-day operations such as the bank’s highly respected monthly Economic Review (circ.: 350,000). In fact, both men take turns running the bank—and supervising its 184 vice presidents—because each of them spends about half of his time on business trips. Between them, Moore and Rockefeller log up to 300,000 miles a year, visit every country in which Citibank does business, including Russia, which honors the bank’s traveler’s checks.

By far the most active U.S. bank overseas, Citibank this week will open its 127th foreign outpost in Colombia’s port city of Cartagena. This year it has sprouted eight other foreign branches from West Berlin to Kuala Lumpur. At home, it has blanketed New York City and suburbs with 151 branches, fully exploiting its status as the city’s only nationally chartered bank, thus being exempt from New York State’s strict limits on branching. Hoping to catch up with Citibank, stockholders of Chase Manhattan last week voted to switch to a national charter.

Some Penalties. Eagerness to expand and willingness to risk have brought some penalties. Citibank lost $2,500,000 on bad loans to Wall Street’s Ira Haupt & Co., which failed after the Tino De Angelis salad-oil scandal (the bank had turned down a loan request by De Angelis), and it dropped $7,800,000 when a member of the Brussels branch speculated in British pounds. Even so, Citibank expects this year to exceed 1964’s record earnings of $87 million. President Moore’s philosophy: “Banking has to be an uninhibited and unrestricted business if it is going to find its way in the modern world.”