--CEO Michael Corbat promotes long-time Citi executives
--Jamie Forese to become head of institutional clients group
--Brian Leach to oversee all risk functions and strategy
(Adds details about the management changes and analyst comment.)
By Matthias Rieker
Citigroup Inc. (C) said Monday that Manuel Medina-Mora and Jamie Forese will become co-presidents of the nation's third-largest bank by assets, filling a spot that had been vacant since the abrupt exit of former chief executive Vikram Pandit in October.
Mr. Forese will also become head of Citi's institutional client group, the unit that includes capital markets, large corporate lending, transaction services, and private banking. Mr. Medina-Mora will continue to lead Citi's global consumer businesses, the bank's recent profit engine.
In giving two of the bank's top executives more prominent roles, Michael Corbat, who succeeded Mr. Pandit nearly three months ago, largely recreated a management team put in place by his predecessor, Mr. Pandit.
Mr. Corbat will have far more direct control over Citi's operations than Mr. Pandit did: All businesses, and all regions except Japan, will report directly to him, along with human resources and public relations.
Mr. Corbat will have 13 senior executives directly reporting to him, while Mr. Pandit had seven. Mr. Medina-Mora and Mr. Forese will take control over the operations and technology for their business units, a function that had previously been centralized and reported into former president John Havens.
Mr. Havens, a close lieutenant of Mr. Pandit and also Citi's head of wholesale banking, left with Mr. Pandit in a shakeup initiated by the board of directors.
Lew Kaden, a vice chairman who was previously chief administrative officer, will retire in the coming weeks.
RBC Capital Markets analyst Gerard Cassidy applauded the moves, saying Mr. Corbat is "moving proven executives into positions of more responsibility." Mr. Cassidy rates Citi's shares outperform with a price target of $44.
Sterne, Agee & Leach Inc. analyst Todd Hagerman said he considers Monday's changes "as a first step...with more executive changes yet to come." Mr. Hagerman had upgraded Citi's shares to buy from neutral last week, in part because of expectations that Mr. Corbat's promotion to CEO would improve profitability. Mr. Hagerman expects Citi share to rise to $50 over the next 12 months.
Citi's stock fell 23 cents in recent trading Monday, to $42.20, amid a broad market selloff. Shares have been rising since Mr. Corbat's appointment as CEO and is the best performing big bank stock so far this year, rising almost 7%.
Importantly for investors, Mr. Corbat also elevated Brian Leach, the bank's highly respected chief risk officer. Mr. Leach was a close ally of Mr. Pandit and credited with helping Citi to curb risk and implement tighter risk controls after the financial crisis hit. His departure would have been a black eye for Citi.
Mr. Leach will become head of risk and strategy. Brad Hu, currently the Asia risk chief, will become the bank's overall chief risk officer and report to Mr. Leach.
Chief Financial Officer John Gerspach will remain in his role, as expected. He will oversee Citi's efforts to cut expenses, including the bank's goal to save $900 million in expenses this year, which the bank said in December would result in more than 11,000 job cuts.
"Citi is fortunate to have very strong leaders with the skills and experience I will rely on as we navigate the challenges and opportunities ahead," Mr. Corbat said in a press release. "While the responsibilities of some members of my team are changing, this leadership team and management structure will ensure continuity."
Mr. Corbat also appointed Jim Cowles as CEO of Europe, Middle East, and Africa, the role Mr. Corbat had before his promotion to CEO. Mr. Cowles "has spent much of his career in the region," Mr. Corbat said.
Citi's chief of operations and technology, Don Callahan, will continue to report to Mr. Corbat but take on a new role as head of all infrastructure that spans across business lines, and ensure that Citi's systems comply with regulatory requirements. Operations and technology will face a heavy burden during the implementation of the cost-cutting plan; more than 5,700 job cuts will come from that area, Citi had said in December.
Write to Matthias Rieker at [email protected]
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