Citigroup to Set Up Separate Credit Card Unit from Consumer Banking
In an effort to restore profit after a record loss, Citigroup will set up an independent credit- card unit and overhaul consumer banking along geographical lines.
Steven Freiberg, the current co-head of consumer banking, will run the card unit, according to a statement made Citigroup today. The rest of the consumer group, mainly bank branches and non-bank lending, will be led by regional heads.
Vikram Pandit, who succeeded Charles O. "Chuck'' Prince as Citigroup Chief Executive Officer in December, is reshuffling management after the company lost more than half its market value in five months. The consumer chiefs will all report to Pandit as he bids to halt a profit decline for a unit that contributes 70 percent of revenue and was previously run by just two people, Freiberg and Ajay Banga.
"One should be supportive of major changes when past performance has been disappointing,'' said Guy De Blonay, a director at New Star Asset Management Group Plc in London who helps manage $1.2 billion in financial stocks. "In being quite aggressive in removing people and getting in fresh blood, hopefully they can turn around the story.''
Terri Dial, who is joining from London-based Lloyds TSB Group Plc, will oversee consumer banking in the U.S., and Banga will be responsible for Asia, the company said. William Mills will run Western Europe and the Middle East, Shirish Apte takes charge of Central and Eastern Europe and Manuel Medina-Mora will head Mexico and Latin America.
Citigroup had a net loss of almost $10 billion in the fourth quarter because of sub-prime-mortgage write-downs at its trading business. Pandit is reducing loans and securities to shrink the bank's $2.2 trillion of assets, and has slashed more than 6,000 jobs.
Published on March 31, 2008
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