But a hedge fund manager with a virulent tongue does, and there’s some bad air between the two of them. Recently Weill, Citigroup CEO Emeritus, was quoted in the press as defending the giant bank he built. “Being large and having a strong balance sheet enables a company to withstand the financial turmoil that happens every now and then in global markets,” Weill said.
In response a former banker turned hedgie manager (of Second Curve Capital) described the company as a “supersized jackalope.” And he didn't stop there:
Why Weill thinks that investors would take comfort in that statement, I can’t begin to understand…Citi has gotten so big, and lumbering, and broadly diversified that it simply can’t generate meaningful organic growth anymore. The law of large numbers won’t allow it.If all I wanted from my investment was an instrument that would “withstand financial turmoil” I’d simply buy Treasury bills and be done with it. Presumably Citigroup’s shareholders want something more than that.
Coming to Weill’s defense was the one other person on earth who doesn’t think Citigroup should be broken up, Saudi Prince Alwaleed bin Talal: “I am adamantly against breaking up Citigroup…I see this as a bad idea that should not even be considered.”
Portfolio's Felix Salmon has helpfully offered to arbitrate the fight. According to Salmon the problem with Citigroup is not that it's too big to grow. It's that it may be too big to manage. "If a strong leader could communicate a simple and effective vision for the company, the calls for its breakup would soon cease," Salmon writes. "But such people are hard to find."
This question doesn't really merit us making a Vizu poll, since the results will most likely be "No" (BSD) and "Yes" (everyone else), but tell us what you think, re: Should Citigroup break up?
Weill Says Big Is Beautiful; Hedge Fund Disagrees [DealBook]
Why Citigroup Should Be Broken Up - Now [Seeking Alpha]
Is Citigroup Too Big? [Portfolio]
Posted by , Jun 21, 2007 9:56AM
as a shitty banker myself. I say break this mutha up.
Posted by hedgie , Jun 21, 2007 9:59AM
Break the bitch.
P.S. BSD is a douche
Posted by , Jun 21, 2007 10:04AM
No, Citigroup will stand the test of time. It's just stupid and shortsighted to try to break up every big company just because it's big.
Btw Tom Brown must be down 20% or more this year with his outsized longs on New Century, Accredited, First marblehead all tanking
Posted by SDH , Jun 21, 2007 10:38AM
Citi should no be broken up because greedy investors want to see more cash. It needs to under go a major restructuring. Perhaps a management structure like GE would do citi well.
Posted by , Jun 21, 2007 10:47AM
"Citi should no be broken up because greedy investors want to see more cash."
Not pursuing the goal of increasing shareholder value would defeat the whole purpose of being a public corporation.
Posted by Series7.5 , Jun 21, 2007 12:10PM
Today's comment by TB is a much more sober and reasonable approach - partial IPOs of the 4 business units while big papa C retains ultimate control
Posted by dean walden , Jun 21, 2007 1:44PM
From Dick Bove of Punk Z…outside, third-party analyst who has not held back when it comes to the Citibank strategy. Interesting read, and he’s much more credible than Tom Brown by a long shot:
It is being reported that Citigroup is in conversations to sell its 80% interest in the Mumbai, India-based processing arm of Citigroup Global Services. The reported
price would be $700 to $750 million in an all-cash deal.
The size of the deal is not of interest. The fact that Citigroup is considering selling is.
For some months now the debate has been ongoing suggesting that Citigroup should break itself up into multiple pieces. Moreover, management has been
charged with being insensitive to the need to split pieces of the company off. It is being called a company that seeks size for the sake of size alone.
This potential sale indicates once again that this view is simply not correct. In fact, Citigroup is selling more of its assets than any other bank that I can think of since
there are virtually no other banks selling any significant parts of their businesses.
• In 2006, Citigroup sold 21 retail branches in New York State.
• In 2005, it sold its card acceptance business and its merchant card processing business.
• It sold its life insurance division as well as spinning off its property and casualty business.
• It sold its business technology finance unit, its marine finance division, its transportation finance business, and its European vendor finance leasing business.
• It sold one asset management business to Fortis and the core business to Legg Mason (LM/$100.42). It sold three broker dealers including CitiStreet. It sold TradeWeb.
• It sold a mortgage portfolio, a manufactured housing loan portfolio, and a multifamily loan portfolio.
• It sold its red umbrella symbol, Cavell Holdings, Drive America Holdings, and Citibank retail banking in the Dominican Republic.
• It has been selling small investments in joint ventures where it does not have the dominant position. It sold a venture capital business in Saudi Arabia.
• The point of listing this array (which was sold for a guesstimated $25 billion) is that Citigroup is the only bank aggressively analyzing its holdings and selling significant as well as small pieces. All of these sales have been completed since 2005 and under Charles Prince’s (company CEO) watch.
• More than any other bank in this country Citigroup is committed to winnowing its product lines to increase RAROC and company earnings.
Thus, when observers attack this company for not attempting to get the highest return on its assets they are simply not looking at the facts.
Posted by , Jul 02, 2007 6:32AM
agreed. there are rumors that Citi is continuing to look for units that are not related to core business within the group for sale, like FIdirect and Yieldbook.