Citigroup's chief executive tapped a longtime ally as chief risk officer, underlining the rising profile of risk management in the pecking order.
Brian Leach was chief risk officer and co-chief operating officer at Old Lane Partners, a hedge fund that Citi acquired last July. In 2006 he co-founded Old Lane alongside Vikram Pandit, Citi's current CEO.
The two men also were colleagues at Morgan Stanley from the 1980s through 2005, when both joined the exodus of top talent that ultimately led to the ouster of CEO Philip Purcell. While at Morgan Stanley, Leach served as risk manager of the institutional securities business, and at one time was chief operating officer for its fixed income division.
Citi named four other senior-level risk managers who will report to Leach:
Suneel Bakhshi was appointed head of risk for the global consumer group and Citibank N.A. He is currently head of the global commercial bank, Citi Markets and Banking.
Charles Monet will head risk oversight of capital allocation. Monet headed credit risk methodology at Morgan Stanley from 2001 to 2006 and is currently an advisor to an international regulatory body drafting new rules for how banks manage default risk in their trading positions.
Greg Hawkins, a pioneer of quantitative fixed-income strategies, will oversee real estate and mortgage risk exposure. He was a leader of Salomon Brothers' fixed-income arbitrage team in the 1980s, and later was a founding partner of Long-Term Capital Management and a managing director of Caxton Associates.
Adil Nathani, a fixed-income executive in Citi's Old Lane Partners unit, will head structured credit risk oversight.
In the wake of more than $20 billion of losses from exposure to sub-prime mortgages and other high-risk assets last year, commentators including Pandit himself have branded Citi's risk management function as sorely in need of an overhaul. Citi has plenty of company there. Merrill Lynch, Morgan Stanley and other U.S. and European banks stung by the sub-prime blowup are also making major changes in how they monitor and control investment risks.
A leitmotif of these reforms is that top executives "are taking a hands-on approach to risk control," according to the Financial Times. It quotes JPMorgan Chase Chief Executive Jamie Dimon telling analysts Wednesday, "It is not risk managers' job. It is the boss' job to manage risk."
Leach is Citi's fourth risk officer in five years, the FT says. He replaces Jorge Bermudez, who took on the role on an interim basis last November amid turmoil that forced former CEO Chuck Prince to step down. Bermudez told senior management last October that he planned to retire, Pandit said in a statement.