Captain Titanic shuffles the Citigroup deck chairs again
Citigroup (C) keeps rearranging those deck chairs.
The latest move on the banking industry’s Titanic is the ouster of Teresa Dial, head of the North American retail banking unit since 2008. The company announced that Dial will leave to pursue personal interests.
She would be replaced by Manuel Medina-Mora. He has been CEO of Citi Latin America since 2004. Prior to that he was CEO of Banamex.
Certainly the North American consumer banking business needs to work better. In the third quarter the consumer business, including credit cards and mortgages, generated a $9.4 billion loss.
But I think the real message in this latest shakeup is that the big problem remains at the top.
Dial was one of Citigroup CEO Vikram Pandit’s first senior hires after he took over at the top of the bank. He recruited her from Lloyds TSB in March 2008.
At some point, you’d think, the board would say, Enough juggling of management positions. Let’s find a CEO with some experience in the retail banking business that was once upon a time Citigroup’s strongest business.
Citigroup’s board is going through its own changes. John Deutch and Michael Armstrong, two longtime board members, are expected to leave the board before the company’s April shareholder meeting. Look to see who gets to fill those seats—business as usual suits or tough-minded executives who will push for change—to see if Citigroup will tackle its real problem, the one at the CEO level, anytime soon.
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I wouldn’t invest in an American-based bank if you gave me the money to do it! Citigroup is, pun intended, just the tip of the iceberg!
Ed,
I agree with you. I pretty much consistently follow Jim’s advice, except on the banking side (no HSBC for me). Sure BofA’s a 4 bagger (or whatever) but I like the company’s I invest in to be solvent.
No disrespect to Jim whatsoever!!!
Friends,
Let’s remember that different styles of investing can peacefully co-exist in one portfolio. Example: I rely on Jim (boy, do I!) for solid analysis and the perspective of years of experience. But I dabble in shorter-term trades as well. Back in September when Citi was just emerging from bailout negotiations I weighed the possibilities and decided that my portfolio would have a ‘race’ – half a position of USB (I am a happy USB customer) versus half a position of C. The finish date was supposedly Christmas. Two months later, while I was out of town, the Citi sold on a trailing stop-loss for a 94% gain. By Christmas, the USB was up about 23% (IIRC) and I’m still holding it. Now, perhaps it was socially irresponsible to invest with business people like the mgmt. of Citi, but dudes, 94% in 2 months!
My point is that I believe recognizing and managing risk within an entire portfolio should leave some room to swing for the fences.
Best, Frank in Mpls.
Congrats Frank! Good call!
I don’t mind swinging for the fences, believe me. I’ve made investments based on what I thought a stock could do within a short time frame.
That said, even when I think a bad stock has been beaten down too much, it’s difficult for me to drag myself to buy it.
Franco,
People made money in CMGI as well. Congrats to them and you as well with Citi.
I’m old school which I know doesn’t hold much appeal these days, so I insist on a company not being bankrupt before I invest. To each there own!
Ed,
Citi isn’t a “bad stock”, Citi needs a whole lot of things to go right before they’re up to a “bad stock”. But what do I know….
I totally agree with Jim on Pandit. HE must go. I will not invest in Citi as long as he is there.
twoyrfixed,
Amen brother!