Citigroup's share price fell back this week on the news that CEO Chuck Prince seems to be doing no more than shuffle a few heads around in response to investor concerns about the direction of his company.
Shares initially rallied about 4% on the news that Prince had promoted Bob Druskin, who headed up the corporate and investment bank, to Chief Operating Officer with a mandate to carry out a comprehensive review of costs. But they soon fell back when investors realised that the Citigroup CEO needs to do something a little more radical than look at the cost of photocopying to get the Citigroup show back on the road.
The Wall Street Journal quotes an unnamed Citigroup executive, who said that 'investors were expecting more than what the actual announcement was. They wanted more of a shake-up. As an org structure, it doesn't really change much'. The Telegraph quotes Ralph Cole, portfolio manager at Ferguson Wellman Capital Management, who said that 'Citigroup is making small incremental changes and I'm not sure what Druskin brings to the table is going to change the bank soon'.
One thing the reshuffle does achieve, however, is increase speculation on who is likely to take over from Prince as chairman and CEO when he eventually hangs up his banking boots. Prince also promoted Druskin's deputies, Michael Klein and Thomas Maheras, in the reorg - making them co-presidents of the corporate and investment bank. They now look to have leap frogged CFO Sally (she's not going anywhere) Krawcheck in the fight for the succession.
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