Morning Coffee: This could be a really wonderful thing for traders at Citi. BofA Paris bomb attempt

If you're a trader at Citi, maybe you don't like your risk limits? Maybe you'd like more capital to play with? Maybe soon you will get some.

But maybe you won't.

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Now that Citi is close to breaking free of its consent agreement and is being run by a new CFO who's “shifting our mindset from remediation to innovation," Bloomberg suggests it's been wondering about buying a regional bank to ramp up its deposits and maybe provide some more capital to its trading operations, among other things. 

Citi is adamant that this is "baseless speculation" on behalf of Bloomberg and that "at this time," it's "solely focused on growing organically by executing our strategy and completing our transformation." However, Bloomberg is sticking by its guns and has published a follow-up story saying there have been preliminary discussions about such an acquisition within Citi and even a meeting with regulators who've indicated that they wouldn't be averse to such a thing taking place.

Citi already has quite a few deposits. At the end of the fourth quarter of 2025, its deposits were $1.4 trillion, an increase of 8% on the previous year. Banking analyst Mike Mayo says Citi has a "structural disadvantage" in accumulating these deposits and agrees that it might be nice to fill that hole "one day."

Citi's structural deposit disadvantage is self-inflicted. It's the result of shrinking its retail network and selling its Smith Barney wealth brokerage to Morgan Stanley back in 2012. As big US retail banks' deposits go, Citi's are small. JPMorgan's total deposits at the end of Q4 were $2.6 trillion; Bank of America's were $2 trillion. 

Trading-focused banks like Goldman Sachs have spent the recent past focused on growing their own deposits as a helpful source of funds. "We've been on a multiyear journey to diversify our funding footprint, including building strategic deposit-raising channels such as private banking, markets and transaction banking," reminisced Goldman Sachs' CEO David Solomon in February. "This has significantly improved our funding structure. Our deposits have grown to $501 billion and now represent roughly 40% of our total funding," Solomon added. 

If Citi had even more retail bankers' deposits, it could use them to increase funding for its markets business, whose average assets were already up 18% y-oy in the fourth quarter of 2025. This might enable Citi's traders to take more risk and to make more money and to be more like Goldman Sachs, where there were 81 trading days with more than $100m in profit last year, compared to around 72 at Citi. 

On the other hand, though, having even more deposits from a retail bank (Citi is apparently thinking maybe Truist Financial Corp in North Carolina or PNC Financial Services Group in Pittsburgh), wouldn't be so good if traders lost the money deposited in those banks by the people in those places. In this case, the government might have to step in, again.

Mayo, for one, thinks Citi is getting ahead of itself. “They’re just finishing cleaning up the mess from mergers from 25 years ago,” he declares. They are not "operationally" ready. Citi seemingly thinks things could change though. Citi's traders might start straining at the leash.

Separately, a very bad thing nearly happened at Bank of America's Paris office at 3.30am.

France 24 says a teenage suspect who was recruited on Snapchat and paid $692 tried to ignite a "device" made of five litres of fuel and an ignition mechanism. He stepped back to take a photograph of his effort and was grabbed by the police. A BofA spokesman said they've been communicating with French authorities.

Meanwhile...

Paul Singer at Elliott Asset Management thinks inflated hedge fund pay won't last. It was "mostly a function of the non-stopbull market, the extraordinary impact of the bull market on fees," and a"paucity of serious downturns in asset prices." A correction is coming. (Business Insider) 

Balyasny spends up to $500m hiring people every year. “The hiring process at Balyasny is inherently rigorous — it is not unusual for candidates to meet 10 to 15 people during the process. They really take their time. It is about finding the right cultural fit, not just performance on paper.” (Financial News) 

Zachariah Barratt joined Citadel from Apollo to trade credit in 2021. Now he's leaving again after a bad bet on bankrupt budget airline Spirit Holdings. (Bloomberg) 

Trump's unpredictability means traders across the equity, fixed-income and commodity markets are now much less likely to hold big bets heading into a weekend. (Bloomberg) 

Stephen Dainton at Barclays thinks things are worse than they seem. “If current events continue into the summer with oil prices at $110–$130 a barrel, that’s a significant concern for credit repricing, growth, and stagflation risk.” (Bloomberg)  

Banks' exposure to private credit is small thanks to all their significant risk transfers. $1 trillion of risks have been transferred off their balance sheets in this way. (WSJ) 

UBS has gated a €400mn European real estate fund for up to three years following a rise in redemption requests. (FT)

Two years after Marco Valla took her job, Ros L'Esperance is leaving. (Reuters)

Citadel Securities has been growing faster than rivals. Over the past eight years, for example, its revenues have risen at a CAGR ofg 18% versus just 8.8% for Virtu’s market making business. This is partly because Virtu focuses on cash equities and Citadel Securities focuses on equity options, but is also down to market share gains. Citadel Securities made $6.8m per head in revenues 2025. This was lower than the $11m of HRT or $10m of Jane Street, but three times higher than Virtu. (Rupak Ghose) 

Citi lawyer Brad Karp is still a partner at law firm Paul Weiss despite appearing in the Epstein files. He's been allowed to stay there out of "humanity" having worked there for 40 years since he was an associate. (Financial Times) 

Apollo is thinking of setting up a second head office in a Southern State. It's considering Austin, Texas, south Florida and Nashville. (Financial Times) 

Wars don't tend to damage the US economy much. The average drop across 30 major geopolitical events since 1939 was just 4%, and the rebound was quick. But the US has been charmed. (WSJ) 

More people are disputing their inheritances, fuelled by by “greed, need, anger, disappointment and jealousy." (Financial Times) 

If your household income is £180k, you might have to cancel your Easter break this year. (The Times) 

Why men use their wives to look for jobs. (Patreon) 

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