C - Citibank

[PlanMaestro]

Michael E. O'Neill

http://en.wikipedia.org/wiki/Michael_E._O'Neill

 

He received an MBA in 1974 from the University of Virginia.[2]

 

In 1974 he joined Continental Illinois and moved to First Interstate Capital Markets in 1984 returning to Continental in 1989 to manage its mergers and acquisitions advisory business. In 1992 he became CFO of Continental. After Continental was acquired by BankAmerica he was head of its global equity investments division in 1994 and 1995. From 1995 to 1999 he was BankAmerica's CFO.[2][3]

 

In 1999 he became chief executive of Barclays Bank but resigned after two months because he had developed a arrhythmic heartbeat.[2] From 2000 to 2004 he was chairman and CEO of Bank of Hawaii.[2]

 

In 2009 he became a member of Citigroup's board of directors. In September 2011 he became chairman of the bank's Citibank NA division, and in March 2012 he was named chairman.[2]

 

 

 

[Yours Truly]

Good summary as to how Pandit was to become C's CEO and how GS members runs everything in the banking industry

 

http://marketdailynews.com/2012/10/24/citigroup-inc-nysec-heres-what-really-happened-to-vikram-pandit/

 

 

[yitech]

Citi Chairman Is Said to Have Planned Chief’s Exit Over Months:

http://www.cnbc.com/id/49563809

[stylized_fact]

Citi Chairman Is Said to Have Planned Chief’s Exit Over Months:

http://www.cnbc.com/id/49563809

 

Here's what I thought was a thoughtful rejoinder to the much ballyhooed NYT piece

 

http://blogs.reuters.com/ben-walsh/2012/10/26/vikram-pandit-create-and-capture-victim/

[dcollon]

From Bankstocks.com

 

http://www.bankstocks.com/AddComment.aspx?ArticleID=6607

 

[fareastwarriors]

O’Neill Acquires $1 Million of Citigroup Stock After Pandit Exit

 

 

 

http://www.bloomberg.com/news/2012-11-28/o-neill-acquires-1-million-of-citigroup-stock-after-pandit-exit.html

[BargainValueHunter]

Citi giving BAC a run for its money:

 

http://www.marketwatch.com/story/citis-corbat-the-knife-2012-12-05?siteid=yhoof2

 

Corbat, is trimming even more of the nation’s third-biggest bank. He’s slashing 11,000 jobs aimed at saving $900 million next year and $1.1 billion annually after that. 

 

Shareholders, who bid up the stock 4% shortly after the opening bell, are obviously excited.

 

Just a thought: the characterization of Corbat as an efficiency guy may prove to be true, but it ignores the fact that Citigroup actually has been shrinking in each of the last four years.

 

It cut 73,000 jobs in 2008 and 2009. It shed more than $250 billion in assets (that was Corbat’s job before he became CEO in October). It sold a stake, and eventually will sell all of Smith Barney, its retail brokerage. Citigroup has been slimming down globally, selling assets. In May, Citi sold a stake in Turkey’s Akbank for $1.15 billion. It sold a $1.9 billion stake in India’s HDFC in February.

 

Citi will be dealing with a hell of a lot of free cash flow over the next few years...  8)

 

 

 

[PlanMaestro]

Citi will be dealing with a hell of a lot of free cash flow over the next few years...  8)

 

Hey Bargain, gives us some time to pick profits in BAC before moving to the next!  ;)

[PlanMaestro]

Customer Loyalty in Retail Banking: Global Edition

http://www.bain.com/publications/articles/customer-loyalty-in-retail-banking-2012.aspx

 

Citibank, Asia's largest wealth manager with approximately $200 billion in assets under management, has built its business mainly through the Citigold brand. Citigold serves affluent and mass-affluent customers in dedicated wealth centers, which are more like premier lounges than conventional branches. Citigold has thrived by differ entiating in several ways:

 

• Excellent customer service achieved through constant performance measurement and improvement. The bank has an intense focus on goals and metrics, such as responding to customer inquiries within a certain number of hours. The payoff: About half of Citigold's new customers who did not already have a Citibank account are referrals from existing customers.
   
  
• A strong sales culture through investments in training and technology. Relationship managers receive continual training in customer service, Citi products, customer behavior and risk management. They're required to deepen the customer relationship every three months, with performance tracked and rewarded accordingly. And they're supported by software that tracks customer propensities and portfolio review schedules.
  
• Careful segmentation and tailored offerings. In Singapore, for example, Citigold has a dedicated center and a targeted offering just for nonresident Indians.
   
  

US and European banks can learn from the more segmented, differentiated offerings and service of Citigold, Axis Bank in India and other banks in Asia and emerging markets. Even where regulations make it more difficult to capture the full share of a customer's financial services spending (as with US regulations that force a division between banking and investment advice), banks can compete more effectively.

[fareastwarriors]

At Citigroup, a Move to Add Spring to Its Step .

 

http://professional.wsj.com/article/SB10001424127887324731304578189761643744622.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

 

Citigroup Inc. C -0.03%isn't planning to fill the president and chief operating officer slot left open by John Havens's departure, said people familiar with the bank's thinking. The move is an attempt by the lender to become more nimble and is the latest sign that Chief Executive Michael Corbat is breaking with his predecessor's management style.

 

The decision isn't final and still could change. But the plan shows the company under Mr. Corbat and Chairman Michael O'Neill is veering from the course set by former CEO Vikram Pandit. Mr. Pandit and his top lieutenant, Mr. Havens, were pushed out in October by the board after a series of missteps.

 

While Mr. Corbat has no immediate plans to change the company's strategy, he wants to make the nation's third-largest bank by assets more agile by eliminating layers of management, said the people familiar with his thinking. The new structure would give more executives a direct line to the CEO than they had under his predecessor. Mr. Corbat currently has 12 executives reporting to him directly, compared with nine who reported to Mr. Pandit.

 

Mr. Corbat briefed the board on his thinking at a regularly scheduled meeting last week, and an announcement is expected early next year, these people said.

 

Since the management shake-up, a sense of unease has settled over the New York company as employees await a full report on Mr. Corbat's plans, which also call for the shuffling of other top positions, said the people familiar with his thinking. Mr. Corbat has already set plans to cut 11,000 jobs, or 4% of the company's workforce.

 

James Forese is expected to gain greater oversight of the institutional clients group, a promotion from his duties as head of securities and banking, these people said. James Cowles is a lead contender to run Europe, the Middle East and Africa, the people said. Mr. Cowles had served as deputy to Mr. Corbat, who had held the job before becoming CEO. Another executive to potentially emerge with greater responsibilities is Jane Fraser, who runs the private bank, although it is unclear what her duties would be, the people said.

 

It is unclear what role Mr. Corbat envisions for executives who were seen as allies of Mr. Pandit. They include Don Callahan, the chief administrative and chief technology officer; and Lew Kaden, a vice chairman. Brian Leach, who also was close to Mr. Pandit, is expected to remain chief risk officer, the people said.

 

Through a spokesman, the executives declined to comment.

 

Before Mr. Pandit appointed Mr. Havens chief operating officer in January 2011, he had 18 executives reporting to him, a number considered unwieldy. Still, the elevation of Mr. Havens, who had worked with Mr. Pandit for 25 years, fueled criticism that management decisions rested in the hands of a few favored executives and sometimes prevented Mr. Pandit from addressing problems in a timely manner, said people who have worked with the former CEO.

 

Mr. Pandit declined to comment. But a person close to him said that a wide swath of managers was involved in decisions, and problems were handled as they arose.

 

Mr. Havens didn't respond to a request for comment.

 

Citigroup's stock, down one cent Wednesday to $39.45, has climbed 8% since Mr. Corbat was named CEO in October. But with the shares still 89% below the level they traded at when Mr. Pandit took the helm in December 2007, Mr. Corbat has had little time to enjoy a honeymoon.

 

Next month, the company will take part in the Federal Reserve's "stress test," which is designed to assess whether big banks have enough capital to continue lending in a severe economic downturn.

 

Citigroup still is weighing whether it will ask the regulator for permission to buy back shares or increase its dividend. Any request likely will be less than the $8 billion to $10 billion share repurchase over two years that the company requested last year, people familiar with the situation said. Regulators denied Citigroup's request, a setback that contributed to Mr. Pandit's ouster.

 

 

 

 

 

 

[zippy1]

Is this another  excellent reason to fire Pandit? Is it typical in the financial industry to do this?  From the story, it appears to be extraordinary..

Citigroup Said to Give CCA Managers 75% Fund Stake for Free

Among Vikram Pandit’s last jobs as Citigroup Inc. ©’s chief executive officer was to decide the fate of the bank’s hedge-fund unit, which employs some of his oldest colleagues. He agreed to give them most of it for free.

While Citigroup is keeping a 25 percent stake, managers at the Citi Capital Advisors unit will pay nothing for the remaining 75 percent of that business as it becomes a new firm managing as much as $2.5 billion of the bank’s money, according to people with knowledge of the plan. The lender will pay the executives fees while gradually pulling out assets to comply with impending U.S. rules, said the people, who requested anonymity because the terms aren’t public.

http://www.bloomberg.com/news/2012-12-21/citigroup-said-to-give-cca-managers-75-stake-in-funds-for-free.html

[fareastwarriors]

http://www.bloomberg.com/news/2013-01-04/goldman-sachs-tells-clients-to-bet-on-citigroup-before-earnings.html

 

Goldman Sachs Group Inc. (GS) told clients to bet on shares in Citigroup Inc. © before fourth-quarter earnings later this month as new Chief Executive Officer Michael Corbat cuts costs and withdraws from some markets.

 

Investors should buy call options on shares in Citigroup before the bank announces its earnings results Jan. 17, Goldman Sachs said today in a note to clients. Calls are contracts that provide the right to buy shares at a certain price. The New York-based firm added Citigroup to its “conviction buy list” and said shares could rise to $49 within a year.

 

[constructive]

GS only missed the first 65% of the move.

 

Personally, I upgraded C to conviction buy at .5x tangible book and downgraded them to overweight at .8x.

[PlanMaestro]

Citigroup chief overhauls top jobs

http://www.ft.com/intl/cms/s/0/70ab4e68-58d2-11e2-bd9e-00144feab49a.html#axzz2HFhEIUPU

 

Citi said on Monday that Jamie Forese and Manuel Medina-Mora would be appointed co-presidents. Both had been thought to be in the running for the role, which was vacated by John Havens who left with Mr Pandit in a contentious reshuffle last October.

[…]

 

As part of Mr Corbat’s drive to rein in expenses, he put his co-presidents in charge of the operations and technology divisions supporting their businesses, which had previously been centralised.

 

He also said that Jim Cowles would become head of Europe, Middle East and Africa, the job that Mr Corbat left when he became chief executive. Brian Leach, head of risk, gets new responsibilities for audit, compliance and strategy.

[…]

 

High quality global journalism requires investment. Please share this article with others using the

Analysts are expecting further evidence of cost-cutting from Mr Corbat, driven by his own comments and the record of Mike O’Neill, the Citi chairman. Mr O’Neill, who was responsible for lauded cost control when he was chief executive of Bank of Hawaii, instigated the management changes last year, lining up Mr Corbat for the chief executive role and pushing out Mr Pandit.

 

 

 

 

[zippy1]

4th Q earning out

http://www.businessinsider.com/citi-earnings-q4-2012-2013-1

Citigroup’s capital levels and book value per share increased during 2012. As of quarter end, book value per share was $61.57 and tangible book value per share7 was $51.19, 1% and 3% increases respectively versus the prior year period. Citigroup’s book value and tangible book value per share each declined 3% in the fourth quarter 2012 as compared to the third quarter 2012 due to the dilutive impact of the issuance of approximately 96 million shares of common stock during the quarter upon the automatic settlement of the T-DECS issued in December 2009, as previously announced. At quarter end, Citigroup’s Tier 1 Capital Ratio was 14.1%, its Basel I Tier 1 Common Ratio was 12.7%, and its Basel III Tier 1 Common Ratio was estimated at 8.7%.

 

 

Read more: http://www.businessinsider.com/citi-earnings-q4-2012-2013-1#ixzz2IEp2s0Cc

[PlanMaestro]

http://www.ft.com/cms/s/0/a31eb338-60a4-11e2-a353-00144feab49a.html#ixzz2IF7ztad3

 

Citigroup missed earnings estimates after the bank, under new chief executive Michael Corbat, boosted reserves for litigation expenses and took a more bearish view on credit quality.

 

Citi reported earnings per share of 38 cents for the fourth quarter, or $1.2bn of net income, and 69 cents a share on an adjusted base. Analysts had expected 96 cents on the adjusted basis, which strips out charges related to staff redundancies and changes to the value of Citi’s own debt.

[PlanMaestro]

Very good interview with Michael Price (Goldman, Dell, Europe, others) where he discovers Banamex 2nd largest bank in Mexico in a neck and neck with BBVA Bancomer.

 

With Santander Mexico, the way behind 3rd largest, at 3x book value after the IPO …  "$7-10 bucks a share just for the 100% owned Mexican sub" looks too low an estimate. Banamex should worth be at least $10 bucks (2x book value).

 

http://www.bloomberg.com/video/mfp-s-michael-price-on-goldman-strategy-dell-yygBCh_OSoeFEvhNeuBQhw.html

[PlanMaestro]

Tepper on Citibank

http://www.bloomberg.com/video/david-tepper-is-bullish-on-the-markets-gbAbgiiiTyqf7RBdLJWh7w.html

[dcollon]

From Davos

 

http://www.bloomberg.com/news/2013-01-24/citigroup-s-corbat-says-pay-environment-is-challenging-.html

 

[PlanMaestro]

Alwaleed.

http://gulfbusiness.com/2013/01/exclusive-prince-alwaleeds-kingdom-holding-plans-new-digital-acquisition/#.UQFniUqb-3l

 

Prince Alwaleed also expressed great confidence in his investment in Citigroup, which saw the appointment of a new CEO late last year.

 

“[Ex-CEO] Vikram Pandit did an excellent job in stabilising Citigroup after the problems it faced in 2008/2009. He has done a good job in getting Citi to be profitable for at least 10 consecutive quarters.

 

“After five years, the board of directors decided to replace him with another person, Micheal Corbat, who is also a very capable leader. I am really optimistic about the future of Citigroup, because it is the only global bank in the world,” he said.

 

“It is the only bank that has a presence in more than 140 countries across the world and it is the only bank that really did not retrench and get smaller like its competitors, Standard Chartered and HSBC, which really shrank during the crisis.

 

“The group continues to show good profitability quarter after quarter, and I am definitely very confident about my investment in the bank,” he said.

 

 

[fareastwarriors]

per PlanMaestro request,

 

snapshot of holders of

A warrants

and B

[PlanMaestro]

Citigroup may exit consumer banking in more countries.

http://www.reuters.com/article/2013/01/31/us-citigroup-countries-idUSBRE90U05P20130131

 

In December, Citigroup said it was withdrawing from consumer banking in five countries - Pakistan, Paraguay, Romania, Turkey and Uruguay - as part of an expense reduction plan that will save $1.1 billion a year and eliminate 11,000 jobs. The cuts were one of Michael Corbat's first major steps as chief executive, a position he took in October. "There is more on the list," said a source familiar with the situation.

[…]

 

Citigroup is one of the most international of U.S. banks, serving consumers in 40 countries out of the 100 in which it has some kind of presence. Any cuts would likely represent a paring of the portfolio rather than a complete rethinking of the bank's commitment to global consumer banking. Outside the United States, just three countries - Mexico, South Korea and Australia - account for half of the company's loans to consumers and the bank's presence in many other countries is tiny.

[…]

 

One of the most radical alternatives Citigroup executives have discussed in the past is spinning off its Banamex unit, the second-biggest bank in Mexico, in a public stock offering there. Mexican regulators would likely allow a standalone Banamex to operate with less capital, which would increase its profitability, one of the sources said.

 

But Banamex is already highly profitable and has a good market position. Selling it would slow Citigroup's efforts to build capital, undercut its strategy of investing in emerging markets and would also mean parting ways with Banamex head Manuel Medina-Mora. Corbat recently named him co-president of Citigroup, which many inside the bank viewed as a sign he is an important part of the new management team.

[…]

 

Two-thirds of the 40 countries where Citigroup does consumer banking provide no more than $2 billion of loans each toward the company's $1.86 trillion in assets. Those small operations include Argentina, Thailand and Russia. Citigroup's Brazilian unit plans to sell its Credicard consumer finance unit as part of an effort to focus on the most profitable areas, according to a report on Wednesday from newspaper Valor Economico, which did not say how it obtained the information. A Citigroup representative declined to comment.

[…]

 

The U.S. consumer bank is also a thorny question for Citigroup. It has much smaller operations in retail banking than many rivals - just about 1,000 branches, less than one-fifth as many as JPMorgan Chase & Co Bank of America Corp and Wells Fargo & Co. Normally, a bank with a relatively small business might look to sell it, but shedding good assets in the United States is particularly difficult for Citigroup, because the bank needs taxable U.S. revenue to benefit from the nearly $50 billion of deferred tax assets that it has on its books.

 

 

 

 

[fareastwarriors]

http://professional.wsj.com/article/SB10001424127887324503204578316092881934114.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Citigroup Chairman Not Pressing Bank Breakup

 

 

Even thinking about breaking up is hard to do. Just ask Citigroup Inc. C -2.88%

 

Michael E. O'Neill was among a small group of directors who after the financial crisis urged the company to weigh the pros and cons of splitting up the third-largest U.S. bank, said people familiar with the deliberations.

 

Mr. O'Neill, now chairman, has overseen a management shake-up in the past year and is backing a broad cost-cutting plan. But exploring a breakup is no longer among his top priorities.

 

Mr. O'Neill has concluded that breaking up Citigroup doesn't make sense now, given economic and regulatory uncertainty as well as a host of financial considerations, these people said.

 

The shift is noteworthy because Mr. O'Neill has shown a willingness to revamp financial companies. He downsized Bank of Hawaii Corp. BOH -0.93% as chief executive and advocated simplifying the sprawling Bank of America Corp. BAC -3.20% when he was a candidate in 2009 to replace Kenneth Lewis as chief executive.

 

Last summer, the case for breaking up giant banks gained a surprising backer when Sanford Weill, Citigroup's former chairman and chief executive as well as the architect of the 1998 megamerger creating the company, called for big banks to split themselves up.

 

Many observers continue to view a breakup as a long shot. Since Mr. Weill made his comments in July, Citigroup's shares have risen 70%. The rally and Mr. O'Neill's reticence underscore the many obstacles to reconfiguring Citigroup as well as other giant banks such as J.P. Morgan Chase JPM -1.70% & Co. and Bank of America.

 

Deciding which entities would retain the banking licenses is one complication. Other deterrents include the large amount of money that would be required to fund units such as the investment bank as stand-alone enterprises and unwinding unwieldy legal structures that include thousands of entities. Citigroup is also hesitant to break up a global network that would be hard to replicate.

 

The stasis frustrates a small but vocal group of analysts, regulators and investors who contend giant banks should consider splitting, either to reduce the risk of another round of costly taxpayer bailouts or to boost the companies' uneven financial performance.

 

With Citigroup shares still 90% below their precrisis peak, executives need to identify those businesses that are underperforming "and do something about it," said Mike Mayo, an analyst with CLSA Crédit Agricole Securities.

 

Others in the "break up the banks" camp include officials such as Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., and Richard Fisher, the president of the Federal Reserve Bank of Dallas. Advocates also include fund managers that bill themselves as pursuing socially responsible investment strategies, such as Trillium Asset Management LLC of Boston.

 

Trillium is among a coalition of investors that wants Citigroup to allow investors to vote on measures that would compel managers to examine a breakup and report back to shareholders. Labor unions led by the AFL-CIO are supporting a similar measure at J.P. Morgan. Both companies have asked the Securities and Exchange Commission for permission to exclude the proposals. SEC decisions are expected shortly.

 

Representatives for J.P. Morgan and the SEC declined to comment.

 

As an additional concern, those in favor of breaking up the banks argue that the largest banks get an unfair advantage from billions of dollars in annual subsidies through federally insured deposits and access to cheap borrowing through the Federal Reserve's discount window.

 

"If we forced risky activities outside the safety net, markets would demand much more capital of these entities," Mr. Hoenig said.

 

Andrew Haldane, the Bank of England's executive director of financial stability, estimated in 2009 that the world's largest banks collectively received more than $700 billion a year in such U.S. subsidies. U.S. Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) have asked the Government Accountability Office to draw up its own assessment of the subsidies' size and impact on a handful of large banks.

 

"So much of what keeps these banks together is ego and power rather than economics," said Sheila Bair, the former FDIC chairman.

 

Citigroup considered breaking up in 2008 as it was reeling from the financial crisis, but decided instead to place hundreds of billions of dollars worth of assets into a separate unit where they are being sold or wound down.

 

Mr. O'Neill wanted to revisit the breakup debate after he joined Citigroup's board in 2009, but was stymied by Vikram Pandit, the chief executive until his forced resignation in October. Mr. Pandit didn't want to consider a further dismembering, people familiar with his thinking said. Through a spokesman, Mr. Pandit declined to comment.

 

Michael Corbat, who succeeded Mr. Pandit as CEO, has embarked on a plan to run the company more efficiently by slashing costs and revamping lagging businesses, but a bigger restructuring isn't on the table, said people familiar with the company.

[valueinvesting101]

Citi has posted presentation on their website about Stress Test:

http://www.citigroup.com/citi/investor/data/p130307a.pdf?ieNocache=190

No dividend increase and buyback of $1.2 bn through Q1 2014

[constructive]

Citi has posted presentation on their website about Stress Test:

http://www.citigroup.com/citi/investor/data/p130307a.pdf?ieNocache=190

No dividend increase and buyback of $1.2 bn through Q1 2014

 

I don't know the consensus, but that looks disappointingly small to me.