New York: The US regulator Federal Deposit Insurance Corporation has questioned the generally positive conclusions in a government-mandated review of Citigroup's top management, says a media report.
Attributing to people familiar with the situation, the
Wall Street Journal said that some officials at the agency
have expressed doubts about the rigour of the report, which
was based partly on interviews of Citi executives who were
asked to rate the effectiveness of their colleagues.
According to the daily, the FDIC has questioned whether
Vikram Pandit, a long time investment banker until he took over
as CEO of Citi in December 2007, can manage a company as
complicated and troubled as Citigroup.
The FDIC insures the deposits in more than 8,000 US
banks, among other regulatory responsibilities.
The report awarded strong overall marks to Citi's
management team and its chief executive Pandit in particular,
but took a harsher stance on some of Pandit's top deputies,
the daily said citing people familiar with the matter.
As per the publication, the report took a harsher
stand on Terri Dial, the head of its global consumer
businesses, Don Callahan, the bank's chief administrative
officer and Lewis B Kaden, a vice chairman who was rotated
through a number of top positions.
The review, conducted this summer for Citigroup's board
by recruiting and consulting firm Egon Zehnder International,
was triggered by the government's stress tests of top US banks
The findings still are being reviewed, the sceptical
reaction could cause the FDIC to give the report little weight
during the next regulatory assessment of the New York firm's
Management skill is one of the factors used by regulators
to determine financial-health ratings of US banks. Such
ratings help determine whether banks would be kept on an
unusually tight regulatory leash.
The Citigroup already is operating under supervisory
agreements with regulators, including the FDIC. Tensions
between the bank and the agency have been mounting ever since
Citigroup's bid to buy most of Wachovia Corp. with FDIC aid
fell apart last fall.
The review which was completed last week and Citigroup's
board began discussing this week whether to make any
management changes in response to the report.
Quoting sources, the WSJ said, the FDIC signed off on
Citigroup's selection of Egon Zehnder to conduct the
management review. FDIC officials vetoed a consulting firm
that the bank initially proposed for the job.
After vetoing the consulting firm favored by Citi, FDIC
officials sent Citi "a list of approved firms acceptable to
them," and one was Egon Zehnder, which largely runs executive
searches for clients, it added.
The WSJ said that one person close to the agency
described the outside report as "a total whitewashing." While
others are having second thoughts about the qualifications of
First Published: Friday, October 09, 2009, 20:12