Citigroup Gets Volckered
NEW YORK (
)-- Even if the Volcker Rule never passes, it has already proved costly for
Citigroup
(C) - Get Report
.
Citigroup lost a pair of proprietary traders to a hedge fund this week, the latest sign
President Obama's proposed "Volcker Rule" is has started to affect the big banks
, as I noted Wednesday.
The traders, Matthew Carpenter and Matthew Newton, quit to join hedge fund
Moore Capital Management
. While I was unable to reach them, and spokespersons for Citi and Moore declined comment, it is hard to imagine the uncertainty created by the proposed rule didn't play an important role in their decision.
The Wall Street Journal
reported Friday that Carpenter wrote an email to colleagues in which "he had only 'positive' things to say about the bank."
The Volcker Rule would force banks like Citigroup,
Bank of America
(BAC) - Get Report
and
JPMorgan Chase
(JPM) - Get Report
to exit highly profitable proprietary trading, hedge fund and private equity businesses.
Less retail-oriented banks like
Goldman Sachs
(GS) - Get Report
and
Morgan Stanley
(MS) - Get Report
might have to make similar moves, or to exit certain commercial and retail banking businesses that benefit from government guarantees.
You can expect to see plenty more defections like these. Citigroup is reported by
Bloomberg
to be shopping a private equity business, and the rules have reportedly influenced JPMorgan's decision about whether to buy RBS Sempra Commodities, a joint venture between the
Royal Bank of Scotland
(RBS) - Get Report
and
Sempra Energy
.
This is the time of year when bank executives collect their bonuses, and while Washington debates the future of their industry, they have little incentive to stick around waiting for the outcome once those checks clear.
--
Written by Dan Freed in New York
.
