Citigroup Inc Chief Executive Officer Michael Corbat has followed up with his pledge three months ago to change the culture of the bank after it has been plagued by problems by its Mexico unit.
The bank has recently fired 11 people linked to the $400 million Banamex loan, according to an employee memo that was signed yesterday by Corbat. The fired employees included four managing editors and two business heads, will soon be added by more people over grounds on their failure to discover or prevent the loan fruad that occurred at the bank's Mexico unit. A person who has been briefed about the matter yesterday said the dismissals also included the chief of risk for the institutional clients group in Mexico, the head of treasury and trade services and head of corporate banking in the nation.
Portales Partners LLC analyst Charles Peabody, who assigned the equivalent of a sell rating to Citigroup's shares, said about Corbat's latest move, "He's clearly sending a message. This is the first sign I have seen where he is holding senior managers accountable. That has been lacking in that culture."
The 54 year-old CEO has been criticized by analysts and investors for his seeming inaction against the senior managers after the bank's recent setbacks. Bloomberg said that the motivation to act might have been spurred from the US Federal Reserve's second rejection of the bank's capital plan in March in three years.
In February. Citigroup made public about the fraudulent invoices that backed the loans to Ciudad del Carmen-based oil services firm Oceanografia SA. The bank said that the discovery had led Citigroup to reduce its previously reported earnings last year by $235 million.
Sandler O'Neill & Partners LP Jeff Harte said over the phone, "Investors will like to see people being held accountable for this. It sends a pretty clear message to your employees, and to investors and counterparties as well, that this kind of stuff will not be tolerated at Citigroup."
