Leo Arduini was skiing in Italy last February when he realised just how much of a threat Covid-19 would pose to the way banks did business.
The 57-year-old was forced into a stint in quarantine as the virus swept across the country, a forewarning to the UK, which had yet to see many cases. When this ended, the head of Citigroup’s markets and securities services unit in Europe, the Middle East and Africa jumped on a plane to the bank’s regional headquarters in London.
“Because I am Italian and have so many friends and links in Italy, I got to see early on in February 2020 that the virus was spreading super-fast and that it was going to have a huge impact,” he says. “I said we need to speed up our contingency plans and trigger them as soon as possible.”
Citi’s Emea CEO, David Livingstone, started a crisis management team. Like most banks, Citi’s contingency plans were set up for an emergency such as a power cut, or terrorist attack, meaning traders would have been shifted to a back-up site to keep operations running. But by early March, ahead of most of its peers according to Arduini, the pandemic had forced the US bank to move 95% of its European employees home in an unprecedented move.
“The strain on the system could have been huge, we’d never done anything remotely similar,” he says.
Nearly a year on and most of Citi’s traders in Emea are still working remotely as Covid-19 lockdowns have persisted. “We are still in the middle of a crisis, despite the vaccine roll out in the UK. It’s impossible to bring back significant numbers of people to trading floors. That will be the case for quite some time and we will need to track developments very carefully,” he says.
Longer term, Arduini believes traders need to come back to the office. “There is no replacement for the in-person interaction and communication between colleagues,” he says. “We have never forced anyone back into the office for the past 12 months, and many of us are looking forward to coming back together when we can. Clients want it too — that level of trust and transparency needed when engaging is better done in person.”
Arduini has been leading Citi’s Emea trading operation, which spans 40 countries, for the past six years. He is 32 years into a markets career, 26 of which have been at the US bank in various senior roles, and he says he finds it “endlessly fascinating”.
Not that this was his plan. As a teenager, he wanted to follow his passion for philosophy, but was persuaded by his family instead to study business at Bocconi University in order to “pay the bills”. However, he says he remains a voracious reader of “religion, history, science”, as well as finance, in what little spare time he has.
Arduini oversees a team of about 2,800 people, 2,000 of whom are in London, and says that trading continues to attract the “best brains”, despite increased competition from tech giants. The sector has also been overhauled over the past 10 years, as automation and shrinking revenues have led many banks to take drastic decisions to shrink trading operations.
“The CVs we attract come with multiple languages, skilled in software development and internships across countries,” he says. “These kids are so good, it’s shocking how much better they are than myself when I started out, despite having top marks from Bocconi — they are phenomenal.”
Arduini has been a constant in a division that has seen a lot of change in the past 12 months, with Fabio Lisanti, Miguel Gabian and Richard Aby all installed as new regional leaders within its European markets and securities services unit. Meanwhile, Citi also swooped on Fater Belbachir to lead its equities division, which has lagged some of its Wall Street rivals in recent years, and hired Lucy Baldwin from Credit Suisse in the new role of head of MSS research and equity advisory. Conor Davis has just been promoted to head of investor sales and relationship management for its markets business.
Citi’s equities unit surged by 57% in the final three months of 2020, leading to a 25% gain for the year to $3.6bn. Revenues remain less than a quarter of its fixed income unit, however, which brought in $17.3bn last year — a 34% gain — and Arduini says that its stock trading unit has a gap to catch up with some of its peers.
Sales and trading revenues surged by an average of 32% at five top Wall Street banks last year, the best performance in a decade, with some banks including JPMorgan breaking records. While some executives have painted 2020 as a one-off after 10 years of shrinking earnings, Arduini says the rally has legs.
“Covid triggered a global reaction from policymakers of unprecedented scale, and that will be reassessed by markets over the next few years,” he says. “It will create a very healthy environment for volumes, intermediation and market participants. My central scenario is that we will see a different overall trend, in terms of revenue wallet for the markets industry, from the past 10 years for three more years at least.”
The pandemic initially also swung the wallet in favour of big US players, which gobbled up 66% of trading revenues in the first quarter of 2020 — their biggest-ever share, according to data provider Coalition.
However, as the crisis has worn on, trading revenues at European banks have surged, with Deutsche Bank and UBS both posting sharp gains in the final three months of the year. Arduini believes European banks are resurgent.
“Covid-19 is reinvigorating more competition into the system, and as a market participant, I welcome it,” he says. “European players are back big time, they are convinced that the market has legs and are reinvesting, and I think that’s healthy for the financial markets in this region.”
Business Administration, Bocconi University
Europe, the Middle East and Africa head of markets & securities services, Citi
Head of investor sales, Emea markets, Citi
Country officer and head of markets for Italy, Citi
Global head of rates sales, Citi
Various roles at Citi
General manager of finance and global markets, Banca Monte dei Paschi
Head of sales and distribution at Caboto
Fixed income trading at San Paolo Finance (now Banca Intesa Group)
Associate at Borsa Italiana
To contact the author of this story with feedback or news, email Paul Clarke