Morgan Stanley sees writing on wall for Citi before major change

May 12, 2026 - 02:53

The first quarter was a blockbuster for big American banks, with combined profits hitting nearly $50 billion. Much of that windfall came from Wall Street trading desks, which cashed in on stock market swings. But beneath the surface, not all is well. Morgan Stanley has reportedly flagged concerns about Citigroup, suggesting the bank faces significant challenges before an expected major restructuring.

While Citi benefited from the same volatile conditions that boosted rivals, analysts at Morgan Stanley see structural weaknesses that could leave it lagging. The warning comes as Citi prepares for a leadership-driven overhaul aimed at simplifying its sprawling operations and cutting costs. Investors have been watching closely, but the Morgan Stanley assessment adds pressure. The report highlights that Citi's reliance on trading revenue may not be sustainable, and its broader business model needs sharper focus. For now, the industry celebrates a strong quarter, but the writing on the wall for Citi suggests tougher adjustments lie ahead.