For the second time in less than a week a major U.S. financial institution has named a new chief financial officer.
This time it is Citigroup Inc., which said Monday that Todd Thomson, its CFO and head of strategy since 2000, would switch jobs with Sallie L. Krawcheck, the chairman and chief executive officer of its Smith Barney brokerage and research division.
The company portrayed the surprise move as a rotation of key managers meant to widen career experience. “We are providing these two talented and accomplished executives the opportunity to build upon their skills and capabilities, while furthering our goal of creating a broadly experienced next generation of leaders for Citigroup,” said Charles O. Prince, chief executive officer, in a press release.
Mr. Thomson, 43, will return to running a business unit. Before becoming CFO he was the head of Citi’s private bank.
Ms. Krawcheck, 39, has no experience as a finance chief but was the chairman and chief executive officer of the research shop Sanford C. Bernstein & Co. before joining Citi in November 2002.
Jeff Harte, an analyst at Sandler O’Neill & Partners LP, said the moves could indicate Citi is grooming its next generation of leaders. Assuming Mr. Prince, 54, stays as CEO for another five to 10 years, “Sallie and Todd are the two leading candidates” to succeed him, “and the moves today underscore that view,” Mr. Harte said.
The changes will take effect Nov. 5. Mr. Thomson and Ms. Krawcheck will remain on the company’s management committee.
Just last week J.P. Morgan Chase & Co. said its chief financial officer of six years, Dina Dublon, would leave at the end of the year to pursue other opportunities. Ms. Dublon said in an interview last week that she had seen the company through several mergers, including its July 1 purchase of Bank One Corp., and wanted to step into the next phase of her career.
Michael Cavanagh, who comes from the Bank One side of the merger and was running JPMorgan Chase’s middle-market banking operations, will take her place as CFO.
Earlier this year Bank of America Corp., fresh from buying FleetBoston Financial Corp., bumped upstairs its long-time CFO, James H. Hance Jr., and moved the less-known Mark D. Oken into the CFO slot. Mr. Hance continues to be a vice chairman of the Charlotte company.
The changes at Citi follow a bumpy patch. In the last month the company has taken heat for a massive government bond trade it made in European markets as well as activities in its Japan operations. The Japanese government kicked out Citi’s private bank and barred the company from participating in government bond auctions.
Through internal communications, Mr. Prince has made it clear he wants compliance and reputation-risk management to be a higher priority of his line managers.
But though Citi has been apologizing for compliance breakdowns (in the Japan case) and other transgressions, analysts said Monday’s announcement, though a curious coincidence, seems not to be anything more substantial. “We believe the CFO requested the change and do not believe the move reflects troubling financial results,” wrote Lehman Brothers analyst Jason Goldberg in a research note about Citi issue Monday.
Ms. Krawcheck has gotten praise for her work at Smith Barney, which was created two years ago in the wake of New York State Attorney General Eliot Spitzer’s investigation into conflicts between investment bankers and stock analysts. Fourteen banking companies paid $1.4 billion in settlements; Citi paid the most, $400 million.
Then-CEO Sanford I. Weill, still Citi’s chairman, was eager to prove that the company wanted to be at the vanguard of change. Citi created Smith Barney as a home, separate from its investment bank, for its equity analysts and 12,500 retail brokers.
Its profits in 2003, its first full year of operation, were down 3% from the comparable figures in the company’s 2002 financial statements. But assets under management were up, as were private client assets.
“Smith Barney has a rich history as one of the original businesses upon which Citigroup was built, and independent equity research remains a critical service to our institutional and private clients,” Mr. Thomson said in Monday’s press release.
“The management, employees, financial consultants, and analysts of Smith Barney have made tremendous strides over the course of the past two years, and I am proud of all we have achieved,” Ms. Krawcheck said in the press release. “Todd and his team have done a great job, and I look forward to working with them and gaining a broader view of the entire Citigroup organization.”
