Morning Coffee: Cost Cuts at Citi?
Like aftershocks after an earthquake, more upheaval is sure to come at Citigroup after Chief Executive Vikram Pandit’s sudden resignation yesterday. Successor Michael Corbat told employees he will make big changes and hinted they could include job cuts. “To thrive, we must be vigilant about how we allocate our resources,” Corbat noted in a memo to employees, adding that “improved operating efficiency” is needed to find success in today’s challenging market.
Judging by his relatively short tenure at the top of Citi’s Europe, Middle East and Africa business, Corbat, who played football at Harvard, won’t be afraid to reassign managers. A month after taking the EMEA post in January, Corbat broke the business into four separate regions and, according to headhunters, made some moderate staffing cuts. Citigroup’s EMEA investment banking operations have quietly grown to the largest in the company, accounting for 33% of the firm’s i-banking revenue.
Known as a traditional banker, Corbat may return Citi to its roots as a global commercial banking powerhouse with, potentially, a renewed emphasis on its European operations. How this will affect Citi’s management hierarchy is yet to be determined. President and Chief Operating Officer John Havens, a close friend of Pandit’s, stepped down on Tuesday, and Chief Risk Officer Brian Leach, another Pandit man, may be departing as well, according the Dealbook. Corbat did say in a analyst call that the “rest of the core management team is staying,” according to Deal Journal.
One thing we know about Corbat, who will get a base salary of $1.5 million, according to Bloomberg, is that he is a loyal team player. Just read this effusive praise from The Harvard Crimson in 1982.
Not everyone is impressed with Citi’s appointment of Michael Corbat. Calling Citi “the incredible shrinking bank,” noted Wall Street analyst Meredith Whitney said that no CEO can turn the firm around in the near-term.
Goldman Comp Rising (eFinancialCareers)
The average compensation at Goldman Sachs is up 15% in the first nine months of 2012, compared to the same period last year. The bank’s impressive third quarter profit may have something to do with it.
Financial Windfall (Bloomberg)
Tilden Park Capital Management, the New York hedge fund founded by former Goldman Sachs trader Josh Birnbaum, reportedly booked a 30% gain in the first nine months of 2012, powered by aggressive investments in non-government-backed mortgage securities.
New Executive Team (Financial News)
Harrods Bank appointed David Cathie, a former chief executive of wealth manager at Adam & Co, as its chief executive. Marco Mazzucchelli, a former deputy chief exec at Royal Bank of Scotland, has also joined Harrods as a non-executive director.
Scandal Rocks Relationships (Financial News)
The $2.3 billion trading loss linked to rogue trader Kweku Adobol forced UBS advisors to spend more time explaining the event than actually servicing customers, according to UBS Chief Financial Officer Tom Naratil, who believes the scandal hurt the bank’s customer relationships.
Israel’s biggest banks, suffering from overstaffing and bloated employee salaries, are reportedly poised to cut jobs and slash compensation.
Out with the Old School (Financial Times)
Banking execs implicated in scandals -along with those who degrade the reputation of Britain’s financial sector - need to be let go for the industry to regain customer trust, says Greg Clark, the U.K.’s new City minister.
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Buzz Around the Office |
Snore of a Game (Star Tribune)
Minnesota Timberwolves forward Kevin Love is out of action after injuring his elbow while sleeping. Who said NBA players aren’t tough?
List of the Day: Interview Misconceptions
The interview process is often defined by a set of unwritten rules. These ones should have never been written, as they aren’t always accurate.
- You should keep your answers short.
- The most qualified person gets the job.
- They want an ambitious response to: “Where do you want to be in five years?”
