Citigroup posted record revenues of $89.6 billion in 2006 – and even beat analyst estimates by 3 cents per share – but profits at the country's largest bank are still down from a year ago. CEO Chuck Prince has been under pressure to boost the bank’s bottom line, and while he has made progress – the stock is up significantly in the last two months – some analysts say it’s time for Citi to find someone new. Jeffery Harte of Sandler O’Neill and Alan Murray of the Wall Street Journal discussed the issues swirling at Citigroup on “Power Lunch.”
Harte and Murray both note that Prince came in and inherited a variety of problems from scandals to compliance issues. He has had a good strategic plan that he’s implemented, Harte says, which including bringing in a new chief operating officer, Robert Druskin. (The bank is also in the process of a major rebranding that could include changing the name and removing the ubiquitous red umbrella from its logo.)
Both men agree that since Prince has now implemented some sweeping changes in Citigroup’s corporate culture, the pressure for Prince to turn that progress into substantial growth will likely increase as the year goes on. “Personally, I’m optimistic he can deliver,” Harte says. Murray says that Prince is in “act two” of his role as CEO and there are signs that investors are giving him some time, but Wall Street still has him on a “short leash,” according to Murray.