An analyst, who has spent the last five years telling investors
to sell off Citigroup Inc. (NYSE:C)’s shares, Michael Mayo, has now reversed
his standpoint after the board has replaced Vikram Pandit as CEO recently.
Mayo works in New York for CLSA. He has changed his underperform
rating as Pandit’s coup indicates more proactive board, as per a note written
by the analyst. The change may result in additional restructuring and more
dividends for stakeholders as the company repairs its reliability with
regulators.
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Chairman of Citigroup, Michael O’Neil leads the board that has
replaced Vikram Pandit with Michael Corbat. The move could improve poor
governance. He has not asked his clients to buy shares of Citigroup based in
New York since October, 2007, when the bank was down with losses amounting to
billions of dollars, associated with subprime mortgages and other securities.
Mayo wrote in his note that the change in leadership at
Citigroup is a symbol of enhanced governance by the board as compared to a
decade of regulatory mishaps and risk management with little or no
responsibility. The change of CEO certainly imparts a greater and better sense
of accountability, even though a smoother transition was expected.
Citigroup directors replaced Pandit after assessing his mismanagement
of operations causing negative outcomes with regulators and damaged reliability
with investors.
Citigroup has gained 3.17% to $38.43 in Wednesday’s session and
rose 1.60% in yesterday’s session.
Citibank used to be the largest US bank. It now stands as the
third largest with $1.9 trillion in assets. It follows JP Morgan and Bank of
America.
New CEO of Citi, Michael Corbet has been the CEO of Citigroup,
Middle East and Africa division. He also led Citi Holdings.
Pandit is often credited for slimming the bank and removing it
from the ownership of the government after the bailout and righting its balance
sheet after going through billions in losses. He came under criticism for not
being able to cut expenses enough last year.
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