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Citigroup chief demands more

Citigroup Inc chief executive officer Charles Prince said last year he wanted the bank to rank No. 1 in all businesses in which it competes. On Tuesday, he tackled the company's lagging performance in investment banking.

Prince promoted Michael Klein to head a new banking unit and removed Robert Morse as chief of global investment banking. The firm also named Thomas Maheras to run a new capital markets unit.

In the past two years, Citigroup had no role in 15 of the 20 biggest acquisitions, data compiled by Bloomberg show.

"Citigroup is seeing shops such as Goldman Sachs Group Inc and Morgan Stanley getting business that it wants," said Richard Bove, a financial services analyst with Hoefer & Arnett Inc, who has a ``strong buy'' on Citigroup.

"Prince was pretty adamant that he intends to be No. 1 in every category and he will not accept excuses for being No. 2, 3, or 4," Bove said

Citigroup's mergers team has slipped to sixth in merger work this year from fifth last year and fourth in 2002, data compiled by Bloomberg show. The bank's market share of deals has climbed to 18 percent this year so far from 14 percent last year.

Goldman Sachs toppled Citigroup last year from its yearlong perch as the No. 1 investment bank in collecting fees for advice and underwriting stocks and bonds.

Goldman's fees from winning the highest-paying investment banking projects rose 25 percent last year to US$2.5 billion, according to Freeman & Co, a New York-based consulting firm. Fees at Citigroup, the world's biggest financial services company, rose just 2.8 percent to US$2.38 billion. The data did not include syndicated loans.

"Organic growth is the No. 1 priority," Prince said in November, a month after he took over the company from Sanford Weill. "No. 3 in equity is not good enough. No. 2 in M&A is not good enough. Our goal is to be No. 1 in every product in which we choose to compete."

Klein, 40, will report to global corporate investment banking chief Robert Druskin, who became head of that business in December. The group run by Maheras, 41, will include equities and fixed-income divisions.
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