Citigroup Inc. (C), the third-biggest U.S. bank by assets, shook up the equities-trading division after last year’s revenue slump by promoting Daniel Keegan and Simon Yates to new global roles.
Mike Pringle, head of global equities trading, will focus on Delta One trading, according to an internal memo obtained by Bloomberg News. Keegan will lead cash equities globally while Yates, head of equity derivatives for the Americas, will be global head of that business. Danielle Romero-Apsilos, a bank spokeswoman, confirmed the memo’s contents. All three will report to Derek Bandeen, global head of equities.
Chief Executive Officer Vikram Pandit, 55, is under pressure to improve equities-trading at New York-based Citigroup after the unit’s revenue tumbled 21 percent last year to $2.76 billion, the biggest drop among the five largest Wall Street banks. Much of the decline came from equity derivatives, resulting from poor performance and erratic markets, Chief Financial Officer John Gerspach said in January.
“Sometimes when you underperformed, it’s just because you underperformed,” Gerspach told reporters. “The decline year over year in equity derivatives is partly from the markets, but it also reflects a certain amount of underperformance on our part. That is an area where we are focused on improving.”
Bandeen, like Pandit, is a former Morgan Stanley (MS) equities- trading executive. The overhaul is part of an effort to enhance “product expertise and global consistency,” Bandeen wrote in the memo.
“After a thorough and realistic year-end review, Citi equities management is optimistic about our ability to achieve our ongoing goals,” Bandeen wrote. “The balance of global and regional management will ensure the breadth and global consistency of the service we provide to our customers.”
Bandeen promoted London-based Pringle to global head of equities trading last April. Pringle previously led equities for Citigroup in Europe, Middle East and Africa. He will continue in his role as global head of equities trading while focusing on Delta One, Bandeen wrote in the memo. The Delta One desk typically helps clients to speculate on or hedge the performance of a group of securities.
Keegan previously worked for New York-based JPMorgan Chase & Co. (JPM) Yates was an equity derivatives executive at Credit Suisse Group AG (CSGN), based in Zurich. He joined Citigroup in 2010.
‘Difficult Market Conditions’
In January, Gerspach told reporters that about half of the division’s total decline in trading revenue came from the equity-derivatives unit, which buys and sells contracts whose values are linked to underlying equities. The decline was driven in part by “difficult market conditions,” which also hurt the firm’s cash-equities business, the bank said.
“Let me be clear, our 2011 revenues in certain businesses in securities and banking were disappointing and unacceptable,” Gerspach told analysts during a Jan. 24 conference call. “While much of the current difficulties reflects market conditions, we equally have some management and execution challenges.”
Gerspach said the rest of the revenue decline came from the Equity Principal Strategies unit, which Citigroup said it would shut. That business bought and sold shares with the company’s own cash, known as proprietary trading. Regulators are seeking to restrict this practice through the proposed Volcker rule, a provision of the Dodd-Frank Act.
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