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Entries in Citigroup (18)

Thursday
Jul262012

Break Up Big Banks, Says Mega-Bank Pioneer

Koichi Kamoshida/Getty Images(NEW YORK) -- One of the architects of mega banking is now calling for the breakup of the world’s largest banks.

Sandy Weill, the former CEO of Citigroup, told CNBC on Wednesday, “What we should probably do is go and split up investment banking from banking, have banks be the deposit takers, have banks make commercial loans and real estate loans, have banks do something that’s not going to risk the taxpayer dollars, that’s not too big to fail.”

In the late ’90s, Weill was a global banking pioneer, building Citi into a financial supermarket.  Now, “I am suggesting that they be broken up so that the taxpayer will never be at risk,” said Weill, adding his voice to a growing chorus of regulators and financial experts.

“Our system has been hijacked and we need to change it,” says Neil Barofsky, the former special inspector general in charge of oversight of the Troubled Asset Relief Program (TARP).  Breaking up the banks, he says, “is widely accepted.”

Barofsky, who makes his case in the new book, Bailout, claims “the only people who have not accepted this it seems like is the big banks themselves and the politicians they seem to affectively control in Washington.”

Copyright 2012 ABC News Radio

Friday
Apr202012

Will Citigroup Shareholders Sue over Executive Compensation?

Justin Sullivan/Getty Images(NEW YORK) -- Citigroup may get one step closer to a potential legal onslaught from shareholders if it proceeds with its compensation package, which was contested by investors in a rare failed "say-on-pay" vote this week.

Citigroup shareholders voted to reject the company's executive compensation plan during an annual stockholders meeting in Dallas on Tuesday after critics complained that top officials, including CEO Vikram Pandit, enjoy high pay that's not well-connected to increasing shareholder value.

The pay proposal received just 45 percent of votes cast and followed Citigroup's announcement on Monday that profits fell two percent to $2.9 billion from a year earlier, missing analysts' expectations.

Many "say-on-pay" lawsuits against companies do not survive the motion for summary judgment in court, said Brian Foley, pay consultant and managing director of Brian Foley & Co. in White Plains, N.Y.  Still, Foley said it is "highly likely" there will be one or more lawsuits against Citigroup if the company proceeds with its pay package.

"If Citigroup acts quickly and significantly maybe that reduces that likelihood or makes an impact.  It depends on what they do," Foley said.

Foley said one driving factor on whether the financial giant moves forward with its executive package is how Citigroup CEO Pandit responds.

"He was paid a very significant amount in 2011 in which they made award commitments to him.  Those don't come off the table unless he or they act," Foley said.  "If they act and he doesn't acquiesce, [the awards] are still his.  As a practical matter, it would have to be a joint action."

Pandit, 55, had $15 million in compensation for 2011, which included a base salary of $1.7 million, a cash bonus of $5.3 million, almost $4 million in deferred stock and another near $4 million in deferred cash.

Included in the compensation package detailed in Citigroup's 2012 annual proxy were multi-year retention award packages for the senior management team.  Pandit's "executive long-term performance retention award" could be worth $40 million, Bloomberg reported. 

Copyright 2012 ABC News Radio

Tuesday
Apr172012

Citigroup Shareholders Reject Executive Pay Plan

Justin Sullivan/Getty Images(DALLAS) -- Citigroup shareholders voted to reject the company’s executive compensation plan during an annual stockholders meeting in Dallas on Tuesday after critics complained that top officials, including CEO Vikram Pandit, collect rewards all too easily.

The proposal received just 45 percent of votes cast and followed Citigroup’s Monday announcement that it made $2.9 billion in earnings, or net income, during the first quarter, down 2 percent from a year ago, missing analyst expectations.

“This is a very historic action on the part of shareholders, and I think it’s a rebuke of what has gone on in terms of the leadership at Citigroup,” Eleanor Bloxham, chief executive officer of the Value Alliance Co., a board advisory firm in Westerville, Ohio, told Bloomberg.

Included in the compensation package detailed in Citigroup’s 2012 annual proxy were multi-year retention award packages for the senior management team.  Pandit’s “executive long-term performance retention award” could be worth $40 million, Bloomberg reported.

Citigroup’s CEO had $15 million in compensation for 2011, which included a base salary of $1.7 million, a cash bonus of $5.3 million, almost $4 million in deferred stock and another near $4 million in deferred cash.

Pandit had an annual salary of $1 for most of 2009 and 2010 while the bank dug out from a government bailout.

Pandit, 55, had the 45th highest compensation among CEOs last year, according to Equilar, an executive compensation research firm. Tim Cook, CEO of Apple, had the highest pay at $378 million.

A spokeswoman for Citigroup said, “Citi’s Board of Directors takes the shareholder vote seriously, and along with senior management will consult with representative shareholders to understand their concerns.”

The spokeswoman said the Personnel and Compensation Committee of the Board “will carefully consider their input as we move forward.”

Proxy advisory firms, which issue recommendations for institutional shareholders, have hit Citigroup for designing pay packages that don’t do enough to increase shareholder value.

Copyright 2012 ABC News Radio

Friday
Mar022012

Citigroup Chairman to Step Down in April

Chris Goodney/Bloomberg via Getty Images(NEW YORK) -- Citigroup’s Chairman of the Board who took the helms of the bank during the federal bailouts in 2009, is stepping down the bank confirmed on Friday.

Richard D. Parsons, a board member since 1996, will stay until the annual stockholders meeting in April. Parsons has held several positions including President and Chief Executive Officer at Time Warner as well as a White House aide under President Gerald Ford.

"Citi still faces a challenging environment, as do all the large banks, but the crisis is behind us. Given the strong position that Citi is in today, I have concluded that the time has come for me to take my leave. Together with the rest of the Board of Directors, I have complete confidence in the management team, the actions they have taken to strengthen Citi, and the course they have charted for the future of one of the world's truly great financial institutions,” said Parsons.

Two other board members will not seek re-election at the April meeting.

Copyright 2012 ABC News Radio

Friday
Feb102012

What the $25B Foreclosure Settlement Means For You

iStockPhoto/Thinkstock(WASHINGTON) -- While the $25 billion foreclosure settlement announced on Thursday is a landmark multi-state deal, it is just a "drop in the bucket" that will help residents of some states more than others, housing advocates say.

The five biggest mortgage servicers, JPMorgan Chase, Citi, Ally Financial, Wells Fargo and Bank of America, have settled, but more lenders could potentially join later.  Under the deal, signed by 49 state attorney generals, 750,000 people could receive checks under the plan and another one million could see the size of their mortgages reduced.

President Obama said the deal could strengthen the overall economy but "by itself will not entirely heal the housing market."

"But this settlement is a start," the president continued.

Gordon Whitman, policy director for PICO National Network of faith-based community organizations, said the deal is "'too small."  The $10 billion in principal reduction compared to $700 billion in negative equity in the U.S. with an outstanding mortgage debt of $8.8 trillion is a "small drop in the bucket of what really needs to be done."

"It needs and will lead to much more significant principle reduction for American homeowners," he said.  "There are a lot of people talking about closure. From our perspective, it's much more logical to think of this as a first step."

The size of the deals per state thus far reflect the commitment of each attorney general, Whitman said.  Homeowners can check the website NationalMortgageSettlement.com for more information by state, except for residents in Oklahoma.

"We think the continued advocacy by the attorney generals is the critical factor to make sure this is just a down payment on a full and fair settlement," Whitman said.

Scott Brown, chief economist with Raymond James, said the one million homeowners who may restructure their mortgages comprise only 10 percent of those underwater. Brown said the deal will not have a large impact on the U.S. economy or consumers.

"Every little bit helps and it will be significant for those restructuring, but it's not going to have a huge impact on the housing sector overall," he said. 

Payments of about $2,000 will be made to about three-quarters of a million households that were foreclosed on through abusive practices, distributed over three years.

"That will be good for those receiving checks, but the impact on overall consumer spending is likely to be relatively small," he said.

Copyright 2012 ABC News Radio

Thursday
Feb092012

Feds Announce $25B Foreclosure Abuse Deal

Office of the Maine Attorney General(WASHINGTON) -- Government officials announced on Thursday a record $25 billion settlement with the five biggest banks related to foreclosure abuses, including "robo-signing" of documents.

Among the money allocated will be $1.5 billion distributed nationwide to about 750,000 borrowers who lost their homes to foreclosure. The deal is the largest multi-state settlement since the Tobacco Settlement in 1998, the Department of Justice said.

Five banks -- Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial -- will also have to "work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide," and "provide up to $3 billion in refinancing relief nationwide," according to the settlement.

Attorney General Eric Holder said the deal by 49 state attorneys general, who worked late into the hours of Wednesday night, does not preclude states from pursuing their own suits against the banks.

Holder announced further terms of the deal would be on a website, NationalMortgageSettlement.com, and residents of the states involved should visit the sites of their respective attorneys general.

Department of Housing and Urban Development Secretary Shaun Donovan said the settlement holds banks accountable for abuses against homeowners, which "continued long after people got the keys to their new home."

"No more lost paperwork, no more excuses, no more rhetoric," Donovan continued.

Donovan said the investigation comprised at least 15,000 hours of reviewing thousands of files of Federal Housing Administration insured loans.

Copyright 2012 ABC News Radio

Thursday
Feb092012

Multi-Million Dollar Settlement over Foreclosure Abuses Near

iStockPhoto/Thinkstock(NEW YORK) -- Federal and state officials are near a multi-billion dollar settlement with five of the nation's biggest banks over foreclosure abuses that took place during the housing crisis, ABC News has learned.

The Department of Justice will hold a press conference at 10 a.m. Thursday to announce an agreement in principal.

At least 42 states have agreed to sign onto the agreement.  New York and California were among the last holdouts and it wasn't clear whether they will join or sue separately.

The deal is estimated to be $25 billion and would involve Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial.

Some of the money would go towards foreclosure prevention measures, such as lowering the loan balance for homeowners who are underwater, while other provisions could lower interest rates.

Another chunk would be set aside to compensate people who lost their homes.  Those homeowners may may get payouts of up to $2,000.

The settlement comes after banks were found to have taken part in "robo-signing" to speed up foreclosures after the housing bubble burst.  The practice involved the mass signing documents without verifying the accuracy of the paperwork.

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Copyright 2012 ABC News Radio

Monday
Jan232012

First 3 Big Banks to Report Compensation Show Drop

STAN HONDA/AFP/Getty Images(NEW YORK) -- The top executives at three large investment banks received stock award pay cuts of 15 to 25 percent after their shares took a beating in 2011. But their pay packages are still eye-popping for an industry that required a massive government bailout a few years ago.

JPMorgan Chase, whose profits filled 23 percent in the fourth quarter, saw stock bonuses fall for its top executives, though the pay of CEO Jamie Dimon remained about the same.

The top 13 executives at JPMorgan Chase had a 15-percent cut in stock awarded, which is only a portion of executive compensation. Those executives received $60.9 million in restricted shares plus stock options, Bloomberg reported. Dimon's pay package was about $23 million.

In November, Dimon said he understood the frustration of the Occupy Wall Street protesters, who had camped outside where he was giving a speech. But he said large corporations contribute to the U.S. economy because they "pay their people more, are more diverse, with health benefits. It isn't like they're the bad actors here."

Figures from Equilar, an executive compensation data firm, show the executive stock awards at JPMorgan Chase, Morgan Stanley and Citigroup were lower this year. Goldman Sachs has yet to file compensation figures.

The total compensation of Morgan Stanley's CEO James Gorman fell 25 percent from 2010 to about $10.5 million, Dow Jones reported.

Morgan Stanley reported a loss of $275 million on Thursday, the bank's first quarterly loss since early 2009. The company's shares fell 44 percent last year, leading to a drop in pay for senior investment bankers and traders by 20 to 30 percent, Bloomberg reported.

Citigroup's full-year profit increased 6.4 percent in 2011, the second year the company was profitable under CEO Vikram Pandit. Last year, when the bank's shares fell 44 percent, Pandit had a base salary of $1.75 million and a retention plan valued at more than $40 million, Bloomberg BusinessWeek reported. In July, he received the remaining $80 million of the $165 million from Citigroup's buyout in 2007 of his hedge fund, Old Lane Partners LP.

In December, Pandit announced Citigroup will lay off 4,500 employees, about 1.5 percent of its 267,000 employees, for which the bank took a $400 million charge in the fourth quarter.

Overall compensation for employees of the biggest Wall Street banks were predicted to sink 27 to 30 percent from a year ago to the lowest level since the 2008 financial crisis, executive consulting firm Options Group reported.

The group predicted the average global compensation would decline 33 percent in the investment banking sectors of fixed income, currencies and commodities, a 29-percent drop in the equities sector and a 14-percent fall in investment banking. According to a report released in late November the only sectors that were forecasted to have increases in the single digits were private wealth management and electronic trading, the report stated.

Bankers' counterparts in East Asia took a hit, but not as deep as in the U.S. and Europe. Options Group forecasted compensation to decline 18 percent in Japan. In Asian countries other than Japan, compensation was forecasted to decline 19 percent.

Total equity grants value of three highest paid executives at JPMorgan Chase, Morgan Stanley and Citigroup since Jan. 1, compared with a year ago:

JPMorgan Chase

1. James Dimon, Chairman & CEO: $20.4 million

Previous: $17.0 million

2. James Staley, Managing Director: $11.4 million

Previous: $14.5 million

3. Mary Erdoes, Managing Director: $10.5 million

Previous: $13.3 million

Morgan Stanley

1. James Gorman, CEO: $5.1 million

Previous: $7.4 million

2. Gregory Fleming, President, Asset Management: $3.4 million

Previous: $4.0 million

3. Paul Taubman, Co-President of International Securities: $3.4 million

Previous: $5.6 million

Citigroup

1. Vikram Pandit, CEO: $3.7 million

Previous: 2011-2012 incentive award yet to be determined

2. John Havens, President & COO: $3.5 million

Previous: $4.8 million

3. Manuel Media-Mora, CEO, Global Consumer Banking: $2.6 million

Previous: $4.0 million

Copyright 2012 ABC News Radio

Tuesday
Jan172012

Wells Fargo Has Strong Earnings; Citigroup Falters

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Wells Fargo & Co. on Tuesday reported a quarterly profit increase of 20 percent, in stark contrast to an 11 percent decline at Citigroup.

Tuesday morning's announcements were as different as night and day, Raymond James analyst Anthony Polini said.

Wells Fargo's earnings announcement was generally "positive" for the last three months of 2011. Its net income rose to $4.11 billion, or 73 cents per share, while revenue decreased 4 percent to $20.6 billion.

"Wells Fargo's great quarter bodes very well for regular banks, particularly if you have less exposure to market-related items or international businesses," Polini said, referring to global concerns such as the 2-year-old European debt crisis.

Polini said the San Francisco-based bank had strong growth in loans, deposits and credit quality.

As the first traditional U.S. bank to report its fourth-quarter earnings, Wells Fargo might be an indicator of other banks without large exposure to investment banking, in contrast to Citigroup.

Citi's quarter was "ugly" and "messy," Polini said.

"More than anything else, Citi missed on market-related items, like trading, or the investment banking side of the business," he added. "The more traditional side of the business performed more in-line. The investment banking side was weaker than expected."

Citi had a profit of $1.16 billion, or 38 cents per share, on revenue of $17.2 billion, less than expected. Citigroup had a profit of $1.3 billion and revenue of $18.4 billion for the same quarter last year. The bank's full-year net income for 2011 was $11.3 billion, up 6 percent from $10.6 billion in 2010.

JPMorgan Chase, the first of the biggest banks reporting their year-end results, said Friday that fourth-quarter profit fell 23 percent but was in line with analyst expectations.

The largest bank by assets said in a statement that profit fell to $3.73 billion, or 90 cents a share, from $4.83 billion, or $1.12, a year earlier. Investment banking revenue declined by 30 percent as trading slowed because of the financial crisis in Europe.

In the third quarter, "dramatic volatility" negatively impacted bank earnings, including Goldman Sachs, which reported its second quarterly loss as a public company. Goldman Sachs will report its earnings Wednesday.

Copyright 2012 ABC News Radio

Wednesday
Dec212011

Heiress, 22, Buys Former Citigroup Chairman’s $88M NYC Apartment

Adam Gault/Thinkstock(NEW YORK) -- The 6,744-square-foot NYC apartment of former Citigroup Chairman Sandy Weill has sold for a record-high $88 million to the 22-year-old daughter of a Russian billionaire who plans to use the apartment part-time when visiting the city.

Representatives for Ekaterina Rybolovleva, daughter of Russian billionaire Dmitry Rybolovlev, confirmed in a statement that a company associated with the woman had signed a contract to purchase Weill’s apartment at 15 Central Park West.

Weill listed the 10-room apartment, with views of Central Park, for $88 million in November, promising to donate the proceeds of the sale to charity.

The New York Observer was the first to report that Rybolovleva paid the full asking price, making it the highest individual transaction in New York City history.

Rybolovleva is studying at an undisclosed U.S. university and plans to stay in the apartment when visiting New York, her reps said.  She was born in Russia but has lived in Monaco and Switzerland for the past 15 years.

The man footing her apartment bill, her father, Dmitriy Rybolovlev, is the world’s 93rd-richest man, according to Forbes, with a net worth around $9.5 billion. He made his fortune through a fertilizer business, Uralkali, which he sold in 2010.

Rybolovlev has made headlines before, for both his real estate transactions and his personal life.

In 1996, he was accused of murdering a fellow businessman before ultimately being acquitted for lack of evidence.

More than a decade later, in 2008, he purchased Donald Trump’s 33,000-square-foot Palm Beach mansion for $95 million. He is now battling his wife, Elena, over control of that mansion in their ongoing, billion-dollar divorce.

His daughter’s New York pied-a-terre includes a wraparound terrace that, alone, is bigger than most New York apartments, at more than 2,000 square feet.

The four-bedroom apartment, which Weill and wife Joan purchased in 2007 for $43.7 million, also includes two wood-burning fireplaces.

The previous real estate record in New York was the $53 million sale of a townhouse to a private-equity investor in 2006.

Rybolovleva is not the first 22-year-old heiress to make real estate headlines in the United States this year.

In July, heiress Petra Ecclestone, daughter of U.K. Formula One billionaire Bernie Ecclestone, made a similarly high-priced purchase on the West Coast.  She paid $85 million in cash for “Candyland,” the nearly 57,000-square-foot Los Angeles mansion that was previously owned by Candy Spelling, the widow of famed U.S. television producer Aaron Spelling, and the mother of reality-TV star Tori Spelling.

Copyright 2011 ABC News Radio







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