--CEO Michael Corbat promotes longtime Citi executives
--Jamie Forese to become head of institutional clients group
--Private banking CIO Richard Cookson laid off
(Adds layoff of private bank CIO, details about operations
restructuring.)
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.
Richard Cookson, the chief investment officer of Citi's private
bank, is leaving as the bank cuts costs.
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 re-created a management team put in place by his
predecessor, Mr. Pandit. Mr. Corbat also managed to retain risk
chief Brian Leach.
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.
In another move, 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 rose 4 cents Monday, to $42.47. Shares have been
rising since Mr. Corbat's appointment as CEO, and Citi is one of
the best-performing big bank stocks so far this year, rising more
than 7%.
Importantly for investors, Mr. Corbat also elevated Mr. Leach,
the bank's respected chief risk officer. Mr. Leach was a close ally
of Mr. Pandit and was 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 costs, 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.
One consequence of the layoffs is the dismissal of Mr. Cookson.
Private banking CEO Jane Fraser said in a memorandum to staff
Monday that Citi decided "there will no longer be a requirement for
a single individual to formulate the firm's investment strategy."
Instead, the private bank will make more use of research from
Citi's capital markets division.
Mr. Corbat said in a press release about the management changes,
"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."
"While the responsibilities of some members of my team are
changing, this leadership team and management structure will ensure
continuity," he said.
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 said in December.
Mr. Callahan said in a memorandum to his staff that centralizing
operations and technology five years ago enabled Citi to "address
issues more quickly" and reduced costs "by more than $4 billion."
Citi was plagued by multiple computer systems before the
centralization and a comprehensive technology overhaul. Now, he
said decentralizing operations and technology will enable
"businesses to better execute coordinated strategies."
Write to Matthias Rieker at matthias.rieker@dowjones.com
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