“The [Greek] election is certainly positive for keeping the euro together,” Pandit said in a brief interview on CNBC’s “Squawk on the Street” on the floor of the New York Stock Exchange. Pandit was there to ring the opening bell to commemorate the bank’s 200th anniversary. “We’ve long thought that its important for Europe to have one strong currency. Having said that, we’ve got to be ready for every eventuality as a back up,” Pandit added. Over the last 18 months, Pandit says Citi is preparing by “very tightly managing” exposure to financial institutions in Europe. In percentage terms, Citi’s holdings have been scaled down to 10 percent from 40 percent during the tumult of the European debt crisis. “The risk we have is extremely manageable, particularly given our capital and our liquidity,” says Pandit. [CNBC]
Kind of! Remember Old Lane? That hedge fund Citigroup had to buy to get its hands on CEO of the Century Vikram Pandit? If you missed out on the chance to invest in it during its all-too-short two years of managing money, don’t despair. Another chance is on the horizon. Sutesh Sharma, the guy who co-founded OLP with Pandit is getting the band back together, minus Uncle Vik, who will be missed, and starting a new fund this fall. Read more »
Here is a fun thing we can do, which is put arbitrary numbers in a list and see how they look. Shall we? We shall.
First, here is how much various bank CEOs and assorted other miscreants made in 2011, if you don’t worry too much about what “made” and “in 2011″ mean*:
This list is, of course, inspired by this exercise by Bloomberg, ranking the top 50 highest paid financial institution CEOs. But if you’re Lloyd Blankfein or, I mean, really, Henry Kravis, you are probably not planning your retirement around your paycheck. Instead you could to some approximation view your job running your financial institution as keeping an eye on the people responsible for your private wealth, in the form of your share ownership in that institution, and Lloyd’s $16mm 2011 paycheck hardly makes up for the $155mm of lost value on his GS shares. Read more »
In the spring of 2010, almost exactly two years ago to date, the New York Times reported that some of Vikram Pandit’s top lieutenants had noticed “a new bounce in his step” and “a smile on his face,” with one executive speculating that the Citi CEO’s cheer could be attributed to the fact that he was starting to “see the day when he will earn more than $1 a year” as being within reach. On January 18, 2011, that day came. After essentially not receiving a salary since 2008, when he pledged to abstain from getting paid until Citi turned a profit, the board of directors approved “an increase in the annual rate of base salary for Vikram from $1 per year to $1,750,000 per year, effective immediately.” It felt good. Really good. Smiles and bouncing as far as the eye could see good. Know what does’t feel so good? This crap. Read more »
That’s Interesting, Because Just The Other Day, Vikram Pandit Was Telling Someone That He’d Rather Hear Alec Baldwin’s Opinions On Airplane Etiquette Than Mike Mayo’s On How To Run A BankBy Bess Levin
As those of you who keep up with the trials and travails of Wall Street’s celebrity analysts know, Citigroup has not always had the best relationships with these sensitive and highly-strung individuals. At one time or another, Meredith Whitney, Dick Bové, and Mike Mayo have all had their emotions toyed with and, particularly in the case of the men, have not responded well. Bové got drunk and sent out a mass email detailing the ways in which Citi defiled her and treated her like a cheap whore not deserving of respect and a couple years back, Mike Mayo went public with his own drama, wherein he and Vikram went from being super close in 2007 to the Citi CEO going radio-silent. FOR NO REASON. FOR TWO YEARS. Read more »
A thing you might want is for investors to be able to understand the financial situation of the companies they invest in. Traditionally, that is a thing that many people want, anyway.* Much of our system of corporate finance is dedicated to that and it mostly works okay.
A place where it breaks down a bit is in financial institutions. Because big financial institutions more or less take shareholder money, leverage it 10 or 30 times, and invest it all in a large and ever-changing mix of mark-to-market assets, some of which they mark themselves. Then they tell you things like “our assets have a current expected value of around X, with a daily variance of around Y” and since they’re sporting they also give you some sort of rough breakdown of what classes those assets fall into and stuff. This does not give you precise confidence about what those assets are worth today or what they’ll be worth in a week. And you can’t really find out much granular detail about the assets, because disclosing them all would be a competitive problem and/or just take too long / make your eyes glaze over. If you’re lucky maybe the banks disclose in some useful form actionable information about whatever you’re currently worried about, but you’re probably worried about the wrong things anyway.
So you do the best you can, and rely on external sources, like ratings agencies, who might know more than you, maybe, sometimes, or like Warren Buffett. Or you rely on government oversight to keep your financial institutions more or less solvent. But regulators, too, need some sort of heuristic for figuring out what assets are risky and how risky they are. After all, a big part of their job is regulating those risks, by doing things like setting capital requirements. It turns out that this is hard. So they sometimes outsource that job to ratings agencies. That doesn’t always work. Then they get all “we’re going to stop outsourcing risk regulation to ratings agencies.” That doesn’t always work either.
Last month, Citigroup announced that it was mulling over the idea of relieving 3,000 employees of their commitments to the firm. A couple weeks later, it decided that yes, that sounded like a good idea, and began giving people the signal. Perhaps to a) send a message that no one should get comfortable yet and b) make it clear to existing staff holding out hope that it was true their direct report just ran out for a pack of smokes and would be “back in 10″ that no, Daddy’s not coming home, Uncle Vik announced today: Read more »