Citigroup's executive shuffle aims to please
By changing a few key positions, Citi appears to be trying to smooth relations with its watchdogs.
(breakingviews.com) -- Citigroup is making nice-nice with regulators.
That much is evident from the troubled bank's latest reshuffling of its executive bench. Though the changes look primarily designed to please Citi's many financial watchdogs, shareholders can still take some succor from chief executive Vikram Pandit's apparent acquiescence.
Citi (C, Fortune 500) named Eugene McQuade to run its core retail banking business, Citibank NA. As the former president and chief operating officer of FleetBoston, McQuade understands retail and commercial banking.
This is the very career experience that regulators, led by Federal Deposit Insurance Corp. chieftain Sheila Bair, had faulted Pandit for lacking in sufficient quantity. Thus, one criticism is neutralized.
Second, the bank is replacing Ned Kelly as the group's chief financial officer with a numbers guy - chief accounting officer John Gerspach. As one of the primary executives to interface with regulators, this appears sensible. Though Kelly seems to have the confidence of his peers within the bank, his career within the investment banking arm made him an odd choice as the bank's public face for finance.
Moreover, Kelly -- who also studded his delivery with Wall Street jargon on shareholder calls during his tenure of less than four months -- proved an unwelcome lightning rod with the bank's overseers. Earlier this year, after Citi lost out to Wells Fargo (WFC, Fortune 500) in a bid for Wachovia, Kelly called FDIC the group's "tertiary regulator" behind the Federal Reserve and Comptroller of the Currency.
So with these changes, Citi appears to have removed one irritant to relations with its watchdogs and answered criticisms it lacked sufficient retail banking know-how at the top.
That should secure more time for Pandit and his management ranks to implement its plan to jettison assets and make the group more manageable. In this respect, the interests of shareholders and regulators are thankfully aligned. 
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