Citigroup Tops Morgan, Goldman in Equity Sales

Citigroup Inc. has unseated Morgan Stanley and Goldman Sachs Group Inc. as the world’s leading stock underwriter for the first time, earning about $1.8 billion of fees from 270 companies in more than 30 countries this year, data show.

Citigroup has managed $48 billion of stock and equity-linked bond offerings in 2005, according to data compiled by Bloomberg News. Morgan Stanley arranged $45.7 billion of deals, followed by Goldman’s $45 billion.

“Since the end of World War II, no commercial bank has been as dominant in underwriting securities,” said Martin Mayer, author of “The Bankers” and a Brookings Institution scholar.

The achievement is a milestone for Citigroup Chairman Sanford Weill’s effort to integrate commercial banking with securities underwriting over the last 19 years, melding companies including Citibank, Salomon Inc. and Smith Barney Inc.

Just a year ago, analysts were questioning Citigroup’s business model because of regulatory missteps in the U.S. and Japan and a government bond trading scandal in Europe. But “the expansion of the business argues that management has been able to convince people to give business to the bank, and [that] they can be trusted,” Mayer said.

Even as Citigroup’s investment banking profit has surged this year, however, weakness in the company’s consumer businesses left total third-quarter operating earnings slightly below year-earlier levels.

The company’s stock, which fell 20 cents to $49.17 on Monday, is up 2% year to date, about half the gain of the blue-chip Standard & Poor’s 500 index.