ONE TOUGH IRISHMAN

Mike O'Neill. former EVP of Continental Illinois, Former EVP for finance of Bank of America, former CEO of Bank of Hawaii and (briefly) Barclays, now Chairman of Citigroup, expert in Grand Masters and fixer of banks who begins with the simple credo, "Stop doing the stupid things."  Oh yeah, and about as tough and straight an Irishman as you will ever meet.

The only story today is the change of management at Citigroup.  Vikrim Pandit resigned unexpectedly this morning (the understatement of the year) to be replaced by Michael Corbat, a long-time Citi veteran.  90% of the talking heads are speculating as to why and how this happened, not to mention the timing which was just after the release of 3rd quarter numbers which, if one could decipher them looked exceptionally good.  ///////////////  Took a short break to listen into the analysts call, and both O'Neill and Corbat emphasized that there was nothing more to Pandit's resignation that his feeling that the time had come.  I suspect that that is correct but I'm also pretty sure that there was general agreement among the board as to that point after a considerable period of discussion (months not days)  that was not particularly a secret if some of the talking heads had expressed any interest.

O'Neill was among a new group of directors elected about three years ago, and the common theme was that their backgrounds were far more in commercial banking than was Mr Pandit's.  When O'Neill was elected Chairman to succeed Richard Parsons, a schmoozer at best and a disaster at worst, the writing was pretty much on the wall as to the strategic choices which loomed before the board and most importantly, who would be best qualified to execute the direction and course the institution would take over the coming years.  Frankly, I never thought that between O'Neill and Pandit, if it came to it, that who would win nor am I the least bit surprised as to the election of Corbat.  In the past few years the most impressive exercise throughout the entire organization was the ridding of over $650 billion in non-core assets, (read, "crap") transforming a massively under capitalized institution into one of the strongest, from a capital standpoint, in the country.  O'Neill was the director charged with the oversight in that process and Corbat was his guy.  It gets you noticed.  Moreover, Corbat has had broad experience in the commercial side of the bank, both domestically and internationally, which is clearly the strategic direction the bank has chosen.  Not surprisingly, this experience mirrors O'Neill's precisely.  As I have said in past pieces that I am sure you remember reading, Citi is the only truly international bank we have and it is there I suspect, on the commercial side that it's future success is to be found.

None of this is to say that Vikrim Pandit was a bad guy or a bad CEO.  He is just not the CEO for this point in time for one of the great financial institutions in history.  In addition, he is too linked to the past calamities, whether fairly or not, to have remained effective.  But make no mistake, this was a board room coup; a gentle one perhaps but one none-the-less organized by one tough Irishman.  I think I might buy a few shares.