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Citibank in South Dakota

Looking Back: Citibank's South Dakota invite benefited both
Eric Renshaw, For the Argus Leader Published 1:19 p.m. CT Oct. 4, 2016 | Updated 6:34 a.m. CT Oct. 6, 2016

Citibank came into existence in New York City in 1812 as City Bank of New York. Its name was later changed to First National City Bank of New York.

City Bank made it through the Great Depression, while other banks did not fare so well. Then-president Charles Mitchell is actually credited with helping to bring about the radical economic downturn that brought on the Depression.

In the 1960s, City Bank started venturing into a newer concept, the credit card. Credit had existed for ages before the plastic card became a thing, but it was credit by individual stores and only used in-house. The new credit cards were more universal and could be used in any establishment that accepted them.

By 1976, the bank was steadily growing and needed to differentiate itself from other similarly named financial institutions. Its name was changed to Citibank, N.A., and a recognizable brand was born.

In the late 1970s, Citibank was borrowing money for its credit card division at 20 percent interest and lending it at 12 percent. Lending money at a loss is generally bad business, but the state of New York had usury restrictions that wouldn’t allow banks to charge enough interest to make money.

South Dakota was in a similar boat as Citibank faced at the time. It could borrow money at higher rates, but its laws at the time wouldn’t allow higher interest rates on loans. In Pierre, legislation was introduced to remove usury limits, and there was little dissent. The Legislature did not do this to attract Citibank, but that was the result. Citi officials looked around at other states where similar opportunities were offered but chose South Dakota.

According to the rules of interstate banking, an out-of-state bank had to be officially invited in by a state in order to set up business. In 1980, Citibank was invited to Sioux Falls and soon broke ground on its building on 60th Street North near Cliff Avenue.

Citibank N.A. (South Dakota) opened in July 1981 and, by the end of that year, employed 400. By September  1983, construction had begun on a third adjacent building, and the number of employees had grown to 900.

Citibank  at its peak had more than 3,000 employees. The company occupies less space in the three Sioux Falls buildings these days than it once did. Its ranks have shrunk through the years, and a good number of its employees now work from home, but Citibank is still one of the top employers in Sioux Falls.

Eric Renshaw of Sioux Falls has written the book Forgotten Sioux Falls and gives a historical perspective on his website Greetings From Sioux Falls


All this is very peculiar. How was it that the bank was paying 20% interest on money that it borrowed, when the usury laws decreed that the maximum interest rate was 12%? What were they doing borrowing from the mob? Just more financial shenanigans if you ask me.

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