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Citigroup (C) Inc. named Jamie Forese and Manuel Medina-Mora co-presidents as Chief Executive Officer Michael Corbat, who took over in October, turned to company veterans to oversee his cost-cutting strategy.
Forese, 49, will be responsible for all of the New York- based bank’s institutional businesses and Medina-Mora, 62, will continue to oversee global consumer banking and Mexico, Citigroup said today in a statement.
Corbat, who replaced former CEO Vikram Pandit, 55, is reversing his predecessor’s strategy of adding staff and increasing investments in consumer and investment banking after the financial crisis. He has said he will cut 11,000 jobs, more than double the number Pandit proposed last year, and shut branches and pull back from some emerging markets.
“Citi is fortunate to have very strong leaders with the skills and experience I will rely on as we navigate the challenges and opportunities ahead,” Corbat, 52, said in the statement. “Jamie and Manuel have both spent their entire careers at Citi and its predecessor companies, and they exemplify the best of Citi.”
Forese and Medina-Mora are replacing John Havens, 56, the Citigroup president who resigned in October with Pandit. The board forced Pandit’s ouster after concluding he had mismanaged operations, a person familiar with the matter said at the time. Don Callahan, 56, head of operations, technology and expense management and a former colleague of Pandit’s at Morgan Stanley, had his duties reduced as part of today’s shakeup.
The appointments show Corbat’s cost-cutting strategy has the support of senior management, according to Marty Mosby, a Memphis, Tennessee-based analyst with Guggenheim Securities LLC.
“It flags or foreshadows that there’s not as much turmoil in moving toward this model as might have been thought,” said Mosby, who recommends buying Citigroup shares. Senior executives’ willingness to move into those positions is a “vote of confidence for him,” Mosby said.
The overhaul is a promotion for Forese that places him atop businesses that posted a combined $6.43 billion profit for the first nine months of 2012, according to the bank’s financial statements. He previously led the securities and banking division, which includes trading, investment banking, private banking and corporate lending. That unit reported a $3.76 billion profit for the period.
Forese will oversee Citigroup’s transaction-services business as part of the shake-up. The head of that business, Francesco Vanni D’Archirafi, 52, previously reported to Havens. That unit made a $2.67 billion profit for the first nine months of last year.
Forese joined Salomon Brothers in 1985 and was named a managing director in 1992, prior to its acquisition by Citigroup, according to a biography on the lender’s website. He took over the bank’s equities group in 2003 before becoming chief of all trading in 2007. He graduated from Princeton University with a bachelor’s degree.
Medina-Mora will continue in his role as chief of consumer- banking businesses, which is Citigroup’s biggest profit center. Profit at the division rose 7 percent to $6.34 billion for the first nine months of 2012.
Pandit promoted Medina-Mora at least twice during his tenure, helping him rise to become head of global consumer banking in November 2011. Medina-Mora took over Citigroup’s Latin American businesses in 2004, when the firm was struggling to recover from more than $2 billion in losses stemming from Argentina’s 2001 debt default.
Medina-Mora previously was head of Banamex, Citigroup’s bank in Mexico, which was acquired in 2001 as part of the $12.5 billion purchase of Grupo Financiero Banamex SA. Medina-Mora’s grandfather and uncle also worked at Banamex, which he joined in 1971.
Forese and Medina-Mora will oversee the operations and technologies that support their businesses as part of the overhaul. These duties previously were handled by Callahan, Citigroup’s chief administrative officer. The change will “improve efficiency,” the bank said.
Callahan also oversaw “expense management,” a task now being transferred to Chief Financial Officer John Gerspach. Mark Rufeh, 54, head of expense management and re-engineering, will leave Citigroup while consumer head of operations and technology Richard Garside is retiring, according to an internal memo. Shannon Bell, a spokeswoman for the bank, confirmed the memo’s contents.
Gerspach, 59, also will assume oversight from Callahan of Citi Ventures, a unit based in Shanghai and Palo Alto, California, that invests shareholders’ funds in startup firms with the “potential to impact the future of financial services,” according to its website. Before his ouster, Pandit sought to turn Citigroup into “the world’s digital bank.”
Corbat also made changes to the firm’s risk-management team, appointing Brad Hu as chief risk officer. Hu, currently head of risk for Asia Pacific, will report to current CRO Brian Leach, who will be “head of franchise risk and strategy,” according to the bank.
The firm overhauled management of regional operations outside the U.S., naming Jim Cowles CEO of Europe, the Middle East and Africa. Cowles, 57, was appointed chief operating officer for the region earlier this year.
The bank’s CEO for North America, Bill Mills, 57, will assume responsibility for community development and international franchise management, a role that includes oversight of corporate governance in 101 countries. Sara Wechter will serve as chief of staff.
Vice Chairman Lewis “Lew” Kaden, 70, will retire, the bank said. Kaden oversaw the $800 million purchase of the Old Lane Partners LP hedge fund in 2007 in a deal that ultimately led to Pandit becoming CEO.
Edward Skyler, the bank’s head of public affairs, will oversee the Citi Foundation, the bank said.
Citigroup advanced 4 cents to close at $42.47 in New York. Shares have rallied 16 percent since Corbat took over on Oct. 16.
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