John Mack, the former Chairperson and CEO of Morgan Stanley (NYSE:MS), has shared insight on Citigroup’s recent CEO change. Mack believes that the jump in Citigroup’s Inc. (NYSE:C) share price signals the delight that Investors had in the board’s recent decision to replace Vikram Pandit, the former company CEO. Pandit, who categorically said that the resignation decision was self inspired, was replaced with Michael Corbat, a top level manager, who, prior to appointment, provided oversight to Citigroup’s undertakings in Africa, Middle East and Europe.
In an interview with Bloomberg’s Stephanie Ruhle and Erik Schatzker, Mack noted that there had been some evident rifts within Citigroup Inc. (NYSE:C)’s board, remarking that there was unhappiness within the board at the time of Pandit’s leadership. The former Morgan Stanley (NYSE:MS) CEO also stressed the importance of a healthy relationship between any CEO and his board. “At the end of the day, a good CEO has to have a good relationship with his board,” said Mack.
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Positive outlook by RBC Capital Markets
Mack’s opinion on the CEO change is further exclaimed by a fresh report from RBC Capital Market, that focuses the CEO change and further accents that the executive change could very well be the first step in Citigroup’s real change.
The RBC Capital Market report also puts to light the resignation of COO John Havens; a resignation that has been widely overlooked, because of the weight of Pandit’s departure. RBC also believes that Corbat and Chairperson, Michael O’Neill, who was elected in April, will do a good job in reversing the company’s troubled fortunes and bringing in some real transformation.
In addition to that, RBC has convictions that extinguishing the new Citi Holdings Unit will be a prioritized objective on the new executive team’s list of tasks. The report also places notable focus on Citigroup’s Inc. (NYSE:C) efforts to shrink its balance sheet, in light of harder financial times. Nonetheless, the report concludes by noting that despite the positive implications the change has on shareholders, Citigroup Inc. (NYSE:C) still has a lot of work to do; documenting something in the lines of ‘there is no magic bullet to resolving the company’s problems.’
In conclusion, RBC Capital Markets believes that the change could be the start of the company’s much needed turnaround, underscoring the company’s new strategy of focusing on shareholders.