On the right track?
I’m on record with my opinion that gigantic financial services firms were beyond the ability of any individual - however talented - to manage effectively. At least (or especially) using the centralized ‘Sloanian’ management paradigm. Citigroup is of course the poster boy for this conjecture.
So it was natural that the following story: Citigroup Chief Signals Major Asset Sales caught my eye:
Citigroup Inc. Chief Executive Vikram Pandit has begun separating the wheat from the chaff in the New York financial giant’s global empire - and there looks to be a big pile of chaff.
Pandit met with stock analysts Thursday and confirmed the bank plans to shed assets to reorganize its business. Analysts from Credit Suisse who attended the meeting said the giant bank is preparing to shed hundreds of billions of dollars worth of assets to support a turnaround that could take a number of years.
So perhaps the new boss - given his somewhat unorthodox rise to the CEO suite - is going to be able to do the right thing. To unwind the complexity. To break up the firm into optimized units? Too early to say, although some didn’t seem to think this was on the table:
While large sections of Citigroup are apparently being set on the examination table, “We did not walk away with the impression that management intended to exit any major business lines in whole,” Katze said. “Smith Barney will not be for sale anytime soon, if management has its say.”
And of course with the pending arrival of the sixth paradigm, this would seem self-evident:
Katze also expects Citigroup to diagnose the need for a “massive amount of streamlining” and an upgrade of technology and systems infrastructure across the bank.
The $100bn question however is: Can an elephant learn to dance to a completely different tune?
Stay tuned.
