Citi (C) Sick of Unconflicted Research, Putting Analysts Back in Investment Bank Again

Citigroup (C) CEO Vikram Pandit may consolidate Citi’s various research groups into one unit tied to its institutional securities arm. The move would reverse a reform implemented several years ago in which Citi moved its equity research group away from its investment banking arm when regulators accused Citi of writing overly-optimistic research in order to win deals. FT:

The overhaul is part of efforts by Vikram Pandit, chief executive, to get Citi’s disparate components to work better together.

The merger of equity, fixed-income and economic research would enable Citi to cut costs by eliminating duplicate back offices and other support functions, people close to the company said.

Proponents of the move argue that the risk of bankers influencing research is exaggerated and that a 2002 deal between banks and regulators makes i-banker meddling less likely. What’s more, most of Citi’s rival banks already operate under a similar system, with “Chinese walls” that prevent bankers from talking to, or interfering with analysts.

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