Chuck Prince's Biggest Challenge: Saving Citi's Reputation
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Code : GOV0013
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Region : USA |
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Introduction: Citigroup is the largest financial services conglomerate in the world worth $100 billion in stock equity. It has $1.3 trillion in assets, profits (2003) of $17.8 billion, operations in 102 countries and 300,000 employees on its payrolls (Annexure I). Formed in 1999 by amerger of Traveler’s Group and Citicorp, Citi has consistently surpassed the Standard & Poor’s index in terms of total returns, and the financial services industry in terms of profitability .Wall Street analysts attribute Citi’s spectacular financial performance, in part, to the strategic vision and tenacity of its charismatic erstwhile CEO, Sanford I.Weill. Over the years, Citi acquired a reputation for retaining top Wall Street talent, having a strong emphasis on the bottomline and pursuing aggressive sales practices. Since 2000, however, Citi has been facing a series of regulatory charges, chief among them its role in concealing Enron’s true financial picture fromits investors. In 2002, Eliot Spitzer charged that Weill was involved in encouraging one of Citi’s analysts, Jack Grubman, to give a false rating to AT&T’s stock in order to win underwriting business from it. More fraudulent practices were later made public and Weill, in 2003, announced that he would step down fromthe CEO’s post, handing over the reins to CharlesO. Prince.Weill, however, would remain as the Chairman till 2006. Though Prince took an active role in instilling a high sense of ethics among Citi’s employees and ensuring that Citi adheres to the highest industry standards, two incidents that took place in August and September 2004 showed that the task was as yet incomplete. |
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