Shakeup at Citigroup

In a major shakeup at the U.S.'s number-one bank by market cap, Citigroup announced it will combine two of its leading units, Citi Markets & Banking and Citi Alternative Investments under the single moniker Institutional Clients Group. The new unit will be headed by Vikram Pandit, formerly of Morgan Stanley, effective immediately. Pandit believes the two units being combined are a natural fit: "These are interrelated businesses, and they have the same clients, they need the same infrastructure, and our view is that if they run on an integrated basis we can accelerate the growth." One of the current heads of the Investment banking unit, Thomas Maheras, is being replaced by Citi insider James Forese. With Citi announcing last week it expects to post a 60% decline in earnings when it reports Monday, October 15, CEO Chuck Prince felt obligated to try and alleviate the growing concerns of Citi shareholders, many of which have extended to his own ability to manage the giant banker. Citi shares are down 13.25% YTD; they are down 1.8% in pre-market trading (as of 7:16 a.m. ET) after gaining 2.2% in composite trading Thursday.

Sources: Press Release, Wall Street Journal, Bloomberg, New York Times, Reuters
Commentary: What Is Citi's Chuck Prince Doing?! • Citibank Earnings Preview • Too Late for a Citigroup Breakup?
Stocks to watch: C. Competitors: BAC, JPM.
Earnings call transcript: Citigroup Q2 2007

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