[A-List] Citygroup dismantles its emerging markets business

[Sabri Oncu <soncu@xxxxxxxxxxx>]

What does this mean for the emerging markets? Is this the
beginning of a trend or just an insignificant event that we
should ignore as far as the emerging markets are concerned?

Sabri

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Citigroup shakes up senior management
By Gary Silverman in New York
Financial Times; Jun 12, 2002


Citigroup, the largest US banking company and one of the biggest
foreign banks in Asia, shook up its management yesterday in
response to big losses in the Argentine financial crisis.

The group is to dismantle its emerging markets business and shift
Victor Menezes, its head, to a more strategic role.

Deryck Maughan, a vice chairman, will become head of Citigroup
International, overseeing the company's five main international
regions, including many of the countries that formerly reported
to Mr Menezes.

The revamp marks the latest in a series of attempts by Sandy
Weill, Citigroup's chairman and chief executive, to foster a more
entrepreneurial culture in the company.

Its top product executives - Bob Willumstad, consumer finance;
Michael Carpenter, investment and corporate banking; and Tom
Jones, investment management - will be given global
responsibilities.

Managers overseeing product lines will be given more power,
working in partnership with country managers who will spot
opportunities and monitor profitability.

The Argentine crisis knocked a total of $1.3bn off the company's
pre-tax earnings in the last two quarters. Mr Menezes said in
April that the crisis went beyond the dangers anticipated by
Citigroup's risk models.

"It [having a separate emerging markets division] separated it
too much from the rest of the company," said Mr Weill, who added
that as a result "some things fell between the cracks".

Mr Weill signalled his concerns about emerging markets in
February, when he named Chuck Prince, chief operating officer of
the company, to serve as chief operating officer of emerging
markets as well, reporting to Mr Menezes.

Mr Prince has frequently played the role of trouble-shooter for
Mr Weill.

"Chuck was helpful in getting a lot of people involved in the
process," Mr Weill said. "I think we have strengthened our
ability over the last three or four months to have a more
proactive, ongoing, all-the-time, looking-forward approach to the
changing risk situation."

Mr Menezes is the last veteran of Citicorp - which merged with Mr
Weill's Travelers in 1998 - to continue in a senior operational
role.

His new responsibilities remain important, since he will slide
into Mr Maughan's former role overseeing acquisitions, a role of
great importance to Mr Weill, who is a keen dealmaker.

Mr Prince will take on responsibility for finance, risk
management and human resources.

Full at:
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