An Alarming Year for Citi's CEO
NEW YORK -- One month after taking over as chief executive officer of Citigroup Inc., Charles O. Prince lectured institutional investors about the importance of accountability. "The sign on my desk," he told them in November, "says, 'No excuses.' " The 54-year-old lawyer, who was tapped by Chairman Sanford I. Weill to lead the world's largest financial-services firm, laid out a simple management philosophy: "Every month you get your bowling score. And you did well or you did poorly. And at the end of a period of time, which is not a long period of time, we decide whether you did a good job or a bad job."
On Friday, Mr. Prince completes his first year at the helm. In the eyes of some investors and analysts, by the standards Mr. Prince laid out last fall, and by the performance of Citigroup's shares, his score has been mixed.
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Mr. Prince has tried mightily to usher in a new period of calm at the scandal-battered institution, to bring the temperature down by avoiding turmoil and surprise. He has worked assiduously to cement ties to key regulators such as New York state Attorney General Eliot Spitzer. The CEO hasn't shied away from apologizing for various institutional mistakes. And departing from the style of his 71-year-old predecessor, Mr. Prince has appeared before reporters about as often as Bob Dylan did in the late 1960s.
Yet despite record operating results, a steady drumbeat of ethical problems has undermined Mr. Prince's effort to reposition the bank as a standard-bearer of Wall Street "best practices." The recent decision by Japanese regulators to oust Citigroup's private bank from Japan jarred investors who had shrugged off things like Citigroup's $2.65 billion WorldCom Inc. settlement as a legacy of the past. Some questioned how much headway Mr. Prince had made in changing the push-the-boundaries environment that led to the scandals.
"There are cultural issues at Citi that permeate the entire company that are problematic," worries Wendell L. Perkins, a senior portfolio manager at Johnson Asset Management, which holds Citigroup shares.
When Mr. Weill was running the company, Mr. Perkins notes, many investors' views of Citigroup mirrored their opinions of Mr. Weill. Mr. Prince's lower profile, he contends, makes it more difficult to assess the company. "I wish he was more visible," he says. "You never see him, you never hear from him. He's not doing a good job of letting people know who he is and what he believes and what he thinks."
A spokeswoman for Citigroup responds that Mr. Prince has spelled out a clear vision for Citigroup in periodic appearances before institutional investors and in presentations to analysts and investors. His broad goals for Citigroup include expanding its international franchise, making targeted acquisitions rather than "transformative" ones, and continuing Mr. Weill's practice of keeping a keen eye on the bottom line. In addition, Mr. Prince has taken a series of steps aimed at beefing up the bank's corporate-governance practices.
Mr. Prince was traveling in China yesterday and unavailable for comment.
During Mr. Prince's tenure as chief executive, Citigroup's shares first climbed modestly, then lost ground, closing yesterday on the New York Stock Exchange at $43.61, down 4.2% from when he took over. Between Oct. 1 and last week, the Dow Jones U.S. Diversified Financial Index, of which Citigroup is a part, climbed 6.5%. The Dow Jones Industrial Average, of which Citigroup is one of the 30 components, is up 7.7%.
When Citigroup announced in July 2003 that Mr. Prince would take over, the company's shares had already recovered much of the ground lost following disclosures about the bank's involvement with Enron Corp. and WorldCom (now MCI Inc.) and the honesty of its stock research.
"We have to stay out of the headlines," he told investors at a conference seven weeks after taking over.
He succeeded in mending fences with Mr. Spitzer, who had been a thorn in Mr. Weill's side. Mr. Prince makes it a practice to notify Mr. Spitzer of pending regulatory issues before they become public, the New York attorney general says, noting that he had never had such a dialogue with Mr. Weill.
As rival banks inked megamergers, Citigroup announced a string of modest acquisitions: The consumer finance-arm of Washington Mutual Inc.; KorAm Bank in South Korea; the derivatives-markets business of Knight Trading Group; and Lava Trading Inc., a provider of trading technology.
Some investors appreciated the caution. "I think it's positive that they haven't done anything major at this point," says Kevin McCloskey, who manages two value funds for Federated Investors Inc. "At this point in the cycle, the risk is that you overpay for assets." Adds Anton Schutz, a portfolio manager at Burnham Financial Services, "You've got to give them some credit for discipline." Both hold Citigroup shares.
Just several months after Mr. Prince assumed the CEO post, Citigroup announced a $242 million charge related to the collapse of Italian dairy giant Parmalat SpA.
Then, in May, Mr. Prince said Citigroup would take a $4.95 billion after-tax charge to settle a lawsuit brought by investors in the former WorldCom and to increase reserves because of other pending litigation, wiping out one quarter's worth of earnings.
The size of the charge left investors like Mr. McCloskey concerned that mopping up after various scandals could become a "bottomless pit." Indeed, there has been a string of further embarrassments: a Securities and Exchange Commission probe into Citigroup's accounting treatment of its Argentine operations; a $70 million settlement of Federal Reserve allegations of consumer-lending abuses; and a $250,000 fine by the National Association of Securities Dealers for failure to produce documents in investor-complaint cases.
In August, Citigroup's London bond desk infuriated rivals by dumping more than $13 billion of European government bonds, then buying a chunk back within the hour at a profit. Competitors complained that it had violated unwritten trading conventions. The United Kingdom's Financial Services Authority launched an investigation, and Citigroup apologized.
This month, Japanese regulators ordered Citigroup to close its private bank by next September, after a multiyear investigation turned up numerous violations in its dealings with customers. Citigroup issued a public statement "sincerely apologizing" for the problems.
In a video message to all employees last week, Mr. Prince reiterated his goal to make Citigroup the world's "most respected" financial-services firm. "In Europe and Japan, two different examples, we failed that test....If a trade is made that in the short run makes us millions of dollars but in the long run damages our global reputation, we will apologize for our actions and take appropriate disciplinary action. And if loose controls and poor management practices lead to regulatory failures, again, we will apologize for our actions and penalize the people who are responsible."
Although the direct hit to the bottom line is likely to be minimal, many analysts viewed the disclosures as evidence that Citigroup hadn't yet instituted an adequate system to monitor behavior across its far-flung global empire.
花旗CEO上任一年评功过
在接任花旗集团(Citigroup Inc., C)首席执行长之职1个月后，查尔斯?O?普林斯(Charles O. Prince)向机构投资者们发表关于责任感的演说－－他与去年11月时对这些机构投资者说，他的座右铭是──“别找借口”。
这位54岁的律师是在花旗集团董事长斯坦福?I?魏尔(Sanford I. Weill)的举荐下成为这家世界最大金融服务公司领头人的，他的管理哲学很简单：“每个月你都会得到自己的保龄球得分。你做得或好或差。在不长的一段时间结束时，你工作做得好坏与否我们将有结论。”
本周五，普林斯就任花旗集团首席执行长之职将满1年，在一些投资者和分析师眼里，如果以他去年秋天就任时所定的标准衡量，鉴于花旗集团目前的股价，普林斯的得分可谓好坏参半。
普林斯一直在努力引导花旗这家饱受丑闻打击的公司进入一个新的平静期，尽力避免混乱和出人意料之事发生在花旗身上，以此将人们的关注焦点从花旗移开。他还在孜孜不倦地加强与一些重要监管人物的关系，如纽约州司法部长斯皮策(Eliot Spitzer)。普林斯也不回避为花旗这类金融机构犯下的错误作出道歉。与他71岁的前任不同，普林斯始终保持低调的行事风格，这一点堪和鲍勃?狄伦(Bob Dylan)在上世纪六十年代后期时相媲美。
然而，尽管运营利润创下历史新高，但接二连三出现的道德问题还是打击了普林斯使花旗再次成为华尔街道德楷模的努力。日本的监管机构最近要求花旗集团旗下花旗银行的4家日本支行停业一年，日本的投资者对此深感震惊，因为他们此前一直认为花旗与WorldCom Inc.达成26.5亿美元和解之类的事情已经成为过去。一些人不禁质疑，普林斯在改变花旗爱打擦边球的行事风格方面究竟取得了多大进展。正是这种行事风格导致了花旗一系列丑闻的发生。
资产管理公司Johnson Asset Management的资深投资组合经理温德尔?L?波金斯(Wendell L. Perkins)说，这种行事风格是花旗的企业文化，它弥漫在公司的各个角落，这正是问题所在。Johnson Asset Management持有花旗的股份。
波金斯指出，在魏尔掌管花旗的时候，许多投资者通过了解魏尔就能形成他们对花旗的看法。但普林斯却行事低调，这增加了人们评估花旗的难度。波金斯说，他真希望普林斯能够更多露面，人们永远别想见到他，永远别想听到他说什么，他在让人们了解他的为人及所思所想方面做的不好。
花旗集团的一位发言人对此回应说，通过定期与机构投资者会面以及向分析师和投资者发表讲话，普林斯已经清楚表明了花旗的看法。普林斯为花旗制定的广泛目标包括扩大其国际业务，有针对性地实施兼并，继续像魏尔那样认真关注公司的利润情况。除此之外，普林斯已采取了一系列步骤来改善花旗的公司监管行为。
在普林斯担任花旗的首席执行长期间，该公司股价先是温和上扬，继而掉头下跌，周一收于43.61美元，较其就任首席执行长时下跌了4.2%。相比之下，在去年10月1日到上周期间，花旗为其成份股的道琼斯美国多样化金融指数(Dow Jones U.S. Diversified Financial Index)上涨了6.5%，花旗同样为其成份股的道琼斯工业股票平均价格指数上涨了7.7%。
当花旗于2003年7月宣布普林斯将出任该公司的首席执行长时，花旗的股价已经收复了大部分失地，因被披露出与安然(Enron Corp.)和WorldCom (现名MCI Inc.)破产案有牵连，以及其股票研究的真实可靠性遭到质疑，花旗的股价此前曾大幅下跌。
普林斯就任花旗首席执行长7周后在一个新闻发布会上说，花旗必须摆脱众矢之的的处境。
他成功修补了与斯皮策的关系，后者曾经是魏尔的心头大患。斯皮策称，普林斯将监管方面的事宜在公开宣布前预先向他通报已经成了一种惯例，而魏尔此前从未这样做过。
在竞争对手签下大笔并购协议的时候，花旗集团却在进行一系列规模适中的收购交易。被它收购的有Washington Mutual Inc.的消费者金融部门，韩国银行KorAm Bank，Knight Trading Group的衍生物市场业务以及交易技术提供商Lava Trading Inc.。
一些投资者欣赏花旗的这种谨慎作风。在Federated Investors Inc.掌管著两只价值型基金的凯文?麦克罗斯基(Kevin McCloskey)认为，花旗集团在目前的经济形势下没有进行大规模的并购交易是件好事情。Burnham Financial Services的投资组合经理安东?休兹(Anton Schutz)也说，在目前所处的经济周期，人们以过高出价收购资产是常见的风险，花旗在这方面的谨慎做法值得表扬。 这两家机构都持有花旗的股票。
在普林斯出任花旗首席执行长之后仅几个月，花旗集团就宣布需要计入2.42亿美元与意大利牛奶业巨头帕玛拉特(Parmalat SpA)破产案有关的一笔支出。
今年5月时普林斯又宣布，为了了结WorldCom前投资者提起的一项诉讼，并为应付其他即将到来的诉讼而增加准备金，公司需要计入一笔49.5亿美元的税后支出，这相当于该公司1个月的利润。
上述支出的庞大规模使麦克罗斯基等投资者担心，花旗应付各类丑闻的支出可能会成为无底洞。事实上，又有一系列令人尴尬之事在涌现：美国证券交易委员会(Securities and Exchange Commission)就花旗对其阿根廷业务的会计处理展开调查；花旗斥资7,000万美元以了结美国联邦储备委员会(Federal Reserve)对其滥发消费者贷款的指控；而全国证券交易商协会(National Association of Securities Dealers)也因花旗未能为一些投资者起诉案提供相关文件而对其罚款25万美元。
今年8月，花旗在伦敦的债券交易人员一次性抛售了超过130亿美元的欧洲政府债券，然后又在一个小时之内买回了相当大一部分，以从中牟利，此举使花旗的竞争对手们大感恼火。竞争对手们抱怨花旗违反了业内不成文的惯例。英国的金融监管部门已对此展开调查，花旗也表示了道歉。
本月，日本的监管当局要求花旗在9月底之前关闭在日本的4家支行，因为此前进行的多年调查终于得出结论，花旗在与客户打交道时存在众多违规行为。花旗在一份公开声明中对这些问题表示了“真诚道歉”。
普林斯上周在对公司全体员工的录像讲话中重申，他的目标是使花旗成为世界上最受尊重的金融服务公司。他在讲话中说，从欧洲和日本发生的这两件事看，花旗未能通过考试......如果花旗从事了一项短期内可赚取数百万美元利润、但长期而言却会损害公司全球声望的交易，花旗将为此道歉，并将改正错误。如果内部监控不力以及管理失当导致公司在监管方面再次出现问题，花旗在为自己的行为道歉的同时将查处那些相关责任人。
许多分析师认为，上述事件对花旗集团利润的直接影响虽然不大，花旗在监管其庞大全球业务方面仍未能建立起一套完备的体系。
