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Credit Agricole Securities analyst Mike Mayo on the future of Citigroup under new CEO Michael Corbat.
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On the ouster of Citigroup's CEO Vikram Pandit Actel guest -- was reporting that Pandit was forced to leave that position.
By an unhappy city board.
-- now is Mike -- financial industry analyst these days a Credit Agricole is also the author of the book exile on Wall Street.
One analyst fight to save the big banks from themselves has been very outspoken about the banking industry.
Over the years we thank -- for joining us.
Short notice today on the telephone first on Fox Business your thoughts Mike on the -- here by the aborted -- Well there's no bigger critic of the old CEO Citigroup Vikram Pandit that -- The stock price performance -- Citigroup while he's been CEO has been the absolute worst up but large bank I don't -- -- -- Citigroup had proper oversight.
Broaden CEO and atop the firm -- -- been in place so I think the board is actually take getting.
You know a step where they'd probably listened to a few shareholders it is just the way this transition has come about is really -- topic.
What about the new got my Corvette what do you know about on.
-- it's not like he's an outsider he's been there almost three decades might.
-- -- nine years at a company probably know.
-- how things are run by you know a company like Citigroup -- to -- dollars in assets it's tough for anyone person to run that well.
Beyond keeping an open mind.
I think sometimes a change can be positive I think Citigroup -- had some of the worst corporate governance.
Under Vikram Pandit.
And fact that -- the way -- transition has taken place.
Is a microcosm of that -- corporate governance here you have not only that CO stepping down you both this CEO and CEO stepping down at the same time.
-- -- -- transition period.
And it's one day after we were all listing to the CEO talked about the long term strategy anyway taking place here by the way where's -- conference call.
With a new CE -- So I think this corporate governance whether it's just in the last few hours or the last few years.
Has been awful so that the the opportunity and challenge of the new CEO to improve -- culture.
That has led to a lot of -- -- and under -- Orman was G-7 talk a little bit more just your right it's really weird to have the earnings come out and -- this move could be bid right after -- -- commit.
Basically comes out of the blue even though somebody like you would say -- we should have done this long time ago I'm I'm I'm sure you've been a credit.
A critic of of Vikram Pandit why do you think it happens this way.
And and and and you get it expand on the point about corporate taking oversee a long term answer or one.
I'm not sure but I think you'd have -- warning signs.
A 182 days ago.
What the negative failed cable -- what that is.
Is that shareholders spoke up instead we don't like the executive compensation plan.
And with good reason because they had artificially low hurdle rate where the top executives predict instead of K burning one sport to what they occurred.
The prior two years 55% that -- orders.
Voted against the day of the CEO and top executives so what better concrete example.
Us -- could start among -- orders and that and that it.
Played out here and it must be some story behind -- -- I don't know what it is Fidelity and resolve this is aid ludicrous.
CEO transition I think I've never seen one like this -- 45 years and covering the industry.
Will this be better bank a year from now -- thank.
I hope so I think what they need to -- Is we have more clear goals under Vikram Pandit.
One day it was let's grow -- that than they still have -- target return on assets which has.
What four to one half above.
The industry average the last thirty years and yesterday they had a few new metrics there are showing that they had brought out as often -- everybody's get a -- -- when it comes the goals.
-- and the actions they need to be more aggressive.
It's telling off the problematic that I have to question on the earnings call yesterday wanna be more aggressive than the CEOs that -- -- there's not funding for people to buy these assets.
Or perhaps they are written down as aggressively as they should.
And then they really need to show that shareholders matter right at that the biggest issue at Citigroup it's it's -- that.
Culture where shareholders don't matter enough look at their disclosure even on yesterday's conference call there's a standard measure.
When you what -- -- -- much risk a bank is taking trading -- value at risk.
And the company would not disclose that.
Most basic measures of risk why would they not disclose that and also don't disclose returns -- business -- but it appeared Citigroup's disclosure to many other banks.
It's really port you take that right to make their compensation scheme that looks pretty -- and it comes up with an attitude up.
Shareholders don't matter and I take again -- the opportunity.
For the new CEO to improve that perception -- -- shareholders.
We're gonna run a second Mike and I'm mine in -- need to ask this question for somebody calls this -- most Lugar Chris you know CEO transition he's ever see interests in 45 years but.
What are you telling people do.
To do with the stock.
Well we first.
First ordered to already last might recommend at this what it was 480 dollar -- is down.
It's over 90% since we first got there -- four years ago.
Our current price target is not that far for the stock is right now -- people would look at this company we're saying.
We still have very big concerns were having an open mind -- -- they still need to improve their oversight of the company.
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