Tuesday, January 23, 2007

Citigroup regroups

Citigroup announced another management change. The two supposed heir apparents to the CEO position, Todd Thomson and Sallie Krawcheck, were removed from their positions. It was incredibly bizarre to those in the know that either of these managers were viewed as potential CEO's of the powerful Citigroup franchise. Whether by guile or luck they managed to appeal to the ego of Sandy Weill before his departure.

Sallie is a normal, smart, and self-effacing person who was a well-regarded securities analyst before moving to Citi. She had no meaningful management experience. She has a penchant for saying the wrong thing at the wrong time to gain approval, and then charming her way out of it. It was a definitely a stretch for her to be the CFO of Citi. The best thing one can say about Todd Thomson is that he is smart but arrogant. He is way way ahead of himself. The most impressive thing about meeting Todd is not intelligence or competence but just how impressed Todd is with himself.

So in a down market Citigroup was up yesterday as a small bit of reality seemed to be seeping into the consciousness of this exceptional franchise. At the same time Citigroup purchased ABN's mortgage portfolio, balance sheet assets and servicing, with only a press release from the business. $9billion in assets and $224billion in servicing and no corporate comment? Since there is no leadership at Citi, the businesses are running the show. In a conglomerate it makes sense for a business manager to get bigger and if successful there follows more attention and bigger bonuses. There should be some corporate strategy attached but at Citi there is none. The CEO office, as far as strategy, has an "Out to Lunch" sign dangling on the door knob.

Citigroup is a franchise with a significant competitive advantage in international banking. Chuck Prince seems to be a custodian who was appointed by Weill to deal with legal issues and to not upstage his departure. Get a leader in, get the lightweights out, and the stock can move to $80 in the next two years.


Anonymous Citi vet said...

While strongly worded, your views of the executive management changes are generally shared within Citigroup. You may, however, be underestimating Prince. He had a hard act to follow, especially since most of the easy positive actions had already been taken by Weill.

4:21 PM  

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