Citigroup (C) will probably merge its commercial bank and investment bank. That makes sense. They both serve corporate customers. Investment banking fees are down and so is corporate lending. Efficiency is the battle cry of financial firms everywhere.

Citi has shown that it has bad luck with improving earnings and efficiencies by firing people and trying to reorganize its divisions. This move will probably not be much different.

According to the FT, "People close to the situation said the creation of the new unit was aimed at increasing Citi’s ability to sell products ranging from loans and trading services to advice on takeovers and financing to large companies."

Why weren’t Citi executives making certain that those functions were being handled well before?

The news gets to the heart of what is wrong at the big bank. It clearly has a large set of independent "kingdoms" which grew up in the firm over time. But, the idea that the people running those units were not doing their best is preposterous, or Citi was run more badly than is already imagined.

Merging groups which should have been doing their jobs and doing them well hardly comes close to addressing the bank’s inability to turn itself around.

Douglas A. McIntyre

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