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Congress should consider placing a limit on the size of the largest banks to put an end to "too big to fail," Fed Gov. Dan Tarullo said Wednesday. He suggested limiting the non-deposit liabilities of a firm to a specific percentage of GDP.
October 10 -
Heidi Miller, the former president of JPMorgan Chase's international businesses, says that megabanks have to do a better job of defending themselves — and acknowledges that some banks run the risk of becoming too big.
September 20
Citigroup's (NYSE: C) ouster of Chief Executive Vikram Pandit has not quelled shareholder unrest.
Two investors have urged Citigroup to explore the sale of some business units, and consider other streamlining options, to increase shareholder value.
Trillium Asset Management, on behalf of the Benedictine Sisters of Mount St. Scholastica, and the AFSCME Employees Pension Plan recently filed a shareholder proposal with the New York company. It asks Citigroup's board to consider "a possible separation of one or more of its business units," the American Federation of State, County and Municipal Employees said Wednesday in a news release.
Mark Costiglio, a spokesman for Citigroup, declined to comment on the proposal but defended the company's track record of restructuring.
"Citi has sold more than 60 businesses and reduced assets in Citi Holdings by more than $600 billion since the credit crisis began," Costiglio said in an email to American Banker. "Our capital levels are among the highest in the industry, and we expect to continue to build capital by generating earnings in our core banking businesses and by continuing to reduce non-core assets."
In April shareholders rejected the bank's
Pandit
Trillium and AFSCME argued that the company's shares have consistently traded below book value since late 2008. They also mentioned the bank's failing the stress test and noted that regulators have prevented it from returning significant capital to stockholders.
"Despite some positive steps taken since the start of the financial crisis, we believe Citigroup's progress toward simplifying and de-risking its business has been slow and incomplete. Citigroup boasts many attractive attributes but remains burdened by excessive complexity, as well as the stigma and risks associated with being named a 'too big to fail' institution," Matthew Patsky, the CEO of Trillium, said in a news release. "These factors could threaten stockholder return through breakdowns in risk management, increased regulatory scrutiny, higher litigation expense, greater capital requirements and poor public perception, among other challenges."
The resolution requests that the board appoint a committee of independent directors to explore "extraordinary transactions that could enhance stockholder value, including the separation of one or more of Citigroup's businesses." AFSCME and Trillium requested that the committee's analysis be publicly reported after the company's annual meeting next year.
"There is a gap of almost $50 billion between what Citi says its assets are worth and what the market is saying," Lee Saunders, chairman of the AFSCME Employees Pension Plan's Board of Trustees, said in the same news release. "It is high time that the board gave shareholders a plan for recovering this value."
