In a written statement issued Monday afternoon, Robert Thomson, managing editor of The Wall Street Journal and editor-in-chief for all of Dow Jones, said: “We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake.”
The bank stock will be replaced by Travelers Co, a large home, auto and commercial insurer, in a substitution that will help offset the decreased presence of financial stocks following American International Group's government bail out last September, said Mr Thomson.
Founded in 1812, Citigroup first joined the Dow Jones Industrial Average, among the world’s oldest and most closely watched indices, in 1997 as Citicorp. Ironically, Citigroup was formed through the 1998 merger of Citicorp and Travelers, creating what was hailed at the time as a “financial supermarket”. Citigroup later went on to spin off Travelers in 2002.
Once the world’s largest and most well-capitalised bank, Citigroup claimed the number one spot in The Banker’s Top 1000 listing for 2006, which ranks banks according to their tier-one capital. The bank ranked second after Bank of America and HSBC in July 2007 and 2008 respectively, despite posting a series of quarterly losses. Citigroup’s robust capital base was dramatically eroded in the final quarters of 2008 as the sub-prime meltdown reached its height obliterating the bank’s stock price and leading to several US-government cash injections.
Under the bank’s restructuring plan, Citigroup will be split into two units and will shed its troubled assets.
Mr Thomson indicated that the exclusion of Citigroup from the index may not be permanent. “We genuinely hope that once the bank has refashioned itself that we will again be able to consider it for inclusion - Citigroup is a renowned institution, not only in this country, but around the world.”
