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Stock Analyst Update

Citigroup Plans to Bulk Up in Europe

The firm agreed to buy Schroders' investment-banking arm for $2.2 billion.


Globally minded Citigroup (C) announced a deal Tuesday to buy the investment-banking unit of Schroders PLC, a leading British mutual-fund company. The acquisition would double Citigroup's investment-banking business in Europe and put it on par with deal-making rivals such as Goldman Sachs Group (GS) and Morgan Stanley Dean Witter (MWD).

This acquisition appears to be a smart one for Citigroup because it would quickly strengthen its Salomon Smith Barney subsidiary, which already has a list of impressive accomplishments in the U.S.--including advising America Online (AOL) on its upcoming merger with Time Warner (TWX). There is no reason why Schroders Salomon Smith Barney, as it is to be called, can't be a powerhouse in European deal-making as well. Given Citigroup's recent performance, competitors should be prepared for Schroders Salomon to come out swinging.

Laura Pavlenko Lutton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.