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.