With another $2.5 billion in writedowns for the second quarter and performance pressures mounting, Citigroup chief Vikram Pandit is running out of time to orchestrate a turnaround. His daunting to-do list of late—which includes shedding nearly
$400 billion in legacy assets and slashing $15 billion in expenses—had one bright spot: He lured Martin
Lippert away from Royal Bank of Canada and appointed him Citi’s CIO and corporate operations and technology chief operating officer.
Lippert, former vice chairman and group head of global technology and operations for RBC, arrives with 25 years of experience and a background in process improvement and integration that Pandit needs to deliver on a long-ignored infrastructural rehabilitation that — at best — merely kept Citi from capitalizing on enterprise-level business strategies. At worst, it blinded Citi to the risks that subprime exposures posed to various areas of the bank, such as its off-book structured-investment vehicles. That makes the fresh eyes of an outsider important for Citi in its restructuring, say analysts.
“Citi has been challenged for many years to integrate disparate technology platforms across the company,” says TowerGroup analyst Guillermo Kopp. “Not just equipment and software, but also people and process.”
Other aspects of Pandit’s challenge, says IDC research director Stephen Elliott, are “some of the larger trends across Citigroup—data center consolidation, application modernization, business intelligence, virtualization…they have to dig into more of ‘What’s the business ramification of what we’re doing?’”
What Lippert brings to the table is more than major-bank experience in creating and integrating solutions in technology and operations, including an earlier stint at then-Mellon Bank. At RBC, Lippert was central to the groundwork for expansion plans into the U.S. that involved integrating disparate and cross-border back-office processing systems for various lines of business. That included banks—most notably RBC Centura (now RBC Bank)—and brokerages, such as RBC’s acquisitions of Dain Rauscher and Tucker Anthony.
At Citi, the party line is that Lippert will be reporting to and working “closely” with Kevin Kessinger, Citi chief operations and technology office. Lippert’s charge, according to the bank’s press release, is to drive the “transformational” change across the bank’s newly centralized technology and operations divisions. Lippert will also be in charge of corporate shared services and real estate technology operations.
Lippert and other Citi officials were unavailable for comment, but analysts say the first order of business for Lippert and Co. is to move quickly on process improvement, lop off costs and set the table for possible spinoffs. “We are talking about an operating expense base in excess of $60 billion,” says TowerGroup’s Kopp. “The challenge for Martin here is to, right away, reduce 10 to 20 percent of that expense base” — or about $5 billion to 10 billion a year.
What some observers question, though, is the Kessinger/Lippert structure. At RBC, Lippert reported directly to CEO Gordon Dixon. Will he have adequate authority at Citi given his charge to drive enterprise transformation? The variable here is “the level of power that Martin’s been given,” Kopp says. At RBC he had absolute power underneath the CEO. (c) 2008 Bank Technology News and SourceMedia, Inc. All Rights Reserved. http://www.banktechnews.com http://www.sourcemedia.com
