by Baz Hiralal
Michael Corbat, who it seems has been involved with every geographic location at Citigroup Inc. besides Asia, is now CEO of the bank. He replaces Vikram Pandit, who, surprisingly to most, stepped down as CEO and board member just one day after Citi reported third-quarter earnings. Its unadjusted earnings were pummeled by a write-down of its remaining stake in Morgan Stanley Smith Barney, which it agreed to sell to Morgan Stanley. Still, adjusted earnings beat expectations and the stock price inched higher, as it did with news of the management shuffle.
Corbat was CEO of Europe, the Middle East and Africa since January. Before that, he was CEO of Citi Holdings, the business unit Citigroup created in January 2009 to house its toxic assets as well as its brokerage and asset management, local consumer units (Citicorp's global bank housed institutional banking and regional consumer banking). Corbat was interim head of Citi Holdings for four months before his role was made permanent. He oversaw the divestiture of more than 40 businesses, including the initial public offering and sale of Citi's remaining stake in Primerica. Corbat also restructured the consumer finance and retail partner cards businesses and divested more than $500 billion of assets. Before he was charged with handling Citi Holdings, he took over global wealth management from Sallie Krawcheck in September 2008.
Corbat has significant institutional experience with Citi, having spent 25 years in the business, eventually becoming global head of the corporate and commercial bank. He also worked on the bankruptcy of Orange County, Calif., sovereign debt restructurings in Latin America and business restructurings in North America and Europe. His operational and commercial banking experience may be one reason Citi didn't mention a replacement for former president and chief operating officer John Havens, who is leaving with Pandit. Citi said Havens, who was also CEO of the institutional clients group, was planning to retire at year's end but decided to leave in light of Pandit's departure. Havens was named president and COO in January 2011, having chief executives of EMEA and Asia-Pacific as well as others report to him instead of Pandit.
Pandit arrived at Citi when it acquired his hedge fund Old Lane Partners LP for $800 million in April 2007. The firm shuttered Old Lane in 2008. However, it should be noted that another Old Lane co-founder and friend of Pandit, Sutesh Sharma, launched hedge fund Portman Square Capital. Sharma had been head of proprietary trading at Citi and Morgan Stanley. It wouldn't be a stretch to think Pandit could end up there.
Pandit was added to Citi as head of its alternative investment group and the investment bank and was named CEO in January 2008, filling the vacancy left by Charles Prince. Pandit and Havens spent time together at Morgan Stanley and both left in March 2005, founding Old Lane the next year. Pandit had been with Morgan for 22 years, rising to president of institutional securities, while Havens was his right-hand man.
In the announcement of Corbat's appointment, Citi didn't reveal much about strategy. Instead, Corbat was quoted as saying that while Citigroup's fundamentals are solid, the bank must efficiently allocate resources and offer the products with the highest potential in the most productive markets. No mention was initially given about cutting, paring down or growing any specific business lines.
In a 4:30 p.m. call with analysts on Oct. 16, chairman Michael O'Neill would not say anything about Pandit's departure beyond that Pandit submitted his resignation and the board accepted it. He did say that the board has had a succession process in place and was prepared and that they looked at both internal and external candidates.
Corbat did not talk about possible changes in strategy. He stated that the current strategy is a good one. His focus for the time being will be on operating expenses as it is budget season. The focus is also on the CCAR (Comprehensive Capital Analysis and Review) stress test. On Citi Holdings, Corbat said the strategy will continue and that Citi would continue to wait to sell assets when the right market opportunities present themselves. On Citicorp, Corbat reiterated that the strategy is good and it will continue to grow. Corbat also mentioned that chief risk officer Brian Leach and chief financial officer John Gerspach plan to stay with Citigroup.
Bank of America Merrill Lynch appointed Margaret Ren as chairwoman, China. She previously left BofA in May 2009, having joined Merrill in February 2007 and was chairwoman of China investment banking. Most recently, Ren was chairwoman and CEO of corporate finance for Greater China for BNP Paribas SA, which she joined in August 2009.
Ren had been a rainmaker at Citigroup Inc., where she was suspended in June 2004 over an inquiry into the $3.5 billion initial public offering of China Life Insurance Co. Ltd. in December 2003. The U.S. Securities and Exchange Commission cleared her of the charges. Ren is also the daughter-in-law of former Chinese premier Zhao Ziyang.
Adebayo Ogunlesi was named an independent director of Goldman Sachs Group Inc. Ogunlesi is the managing partner and chairman of private equity firm Global Infrastructure Partners. From 1983 to 2006, he held various positions at Credit Suisse Group, including as executive vice chairman and chief client officer from 2004 to 2006.
Aquila Capital tapped Stuart MacDonald, formerly with Gems Advisors, as a managing director in its institutional business. He has also worked at Henderson Global Investors, West Merchant Bank and Buchanan Partners.
Alston & Bird LLP said Larry Gage, founder and former president of the National Association of Public Hospitals and Health Systems and co-founder of the American International Health Alliance, joined the firm as senior counsel in Washington. Gage focuses on public sector and nonprofit health law and policy.
Yahoo! Inc. recruited Google Inc.'s Henrique de Castro as chief operating officer, reporting to CEO Marissa Mayer. De Castro will take the role on or before Jan. 22. Most recently, he was vice president of Google's worldwide partner business solutions group, responsible for advertising platforms and services for the search giant's publisher and commerce partners. Prior to that, he led Google's media, mobile and platforms organization. Prior to Google, de Castro spent two years at Dell Corp., where he managed sales and business development operations across Western Europe.
Clippings from the next column:
-- Citigroup Inc. hires former Silver Lake partner Masao Yoshikawa as head of mergers and acquisitions, Japan.
-- Rupert Hill, formerly with Bank of America Merrill Lynch, joins Greenhill & Co. as a managing director.
-- Prem Parameswaran joins Jefferies & Co. as global head of media and telecom investment banking.
-- Lincoln International adds four healthcare investment bankers.
-- Williams Capital Group LP hires Sean Boyea as a principal in Sacramento.
-- Forward Management LLC plans to offer a long/short equity strategy investing globally across all healthcare sectors, adds the Asymmetry Capital Management team.
Vikram Pandit says goodbye to Citigroup (could he end up at Portman Square?), while new CEO Mike Corbat brushes on strategy.