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After a Long Wait, a Critic of Citigroup Wins a Meeting With Top Executives

Citigroup has decided to embrace the old adage that one should keep friends close — and enemies even closer.

Top executives at the big bank will sit down this week with Michael Mayo, an outspoken financial analyst who has been publicly denouncing Citigroup . His list of complaints is long. In a recent report titled “A Matter of Trust,” he said that meeting the firm’s financial targets “can encourage short-term excesses over long-term prudence” and he criticized the bank for what he calls aggressive accounting tactics.

“Many of Citi’s problems relate to risk management, and there are several red flags,” he said.

A Citigroup spokeswoman declined to comment.

It is common for Wall Street executives to meet with stock analysts from time to time. But Mr. Mayo, who works for Crédit Agricole Securities, said that senior Citigroup officers had declined his requests for a meeting for almost two years.

In June, the analyst said, he spotted Citigroup’s chief executive, Vikram S. Pandit, in the lobby of an office building in Boston and made a beeline toward him.

“He asked me how I was doing, and I said ‘Not well, I haven’t had a meeting with you in two years.’ ”

Mr. Pandit, Mr. Mayo said, looked around “at his entourage” and asked if anyone had a problem if he met with Mr. Mayo. No one did, and Mr. Pandit agreed then to see him. “It was man to man, eye to eye,” Mr. Mayo said.

Still, he did not hear from Citigroup, and he raised the issue publicly in July on the firm’s second-quarter earnings conference call with analysts. On Sept. 10, he heard from the bank, letting him know a date had been set.

The two sides are scheduled to meet on Friday at Citigroup’s Midtown Manhattan offices. Both Mr. Pandit and the chief financial officer, John C. Gerspach, will sit down with Mr. Mayo. Mr. Mayo is bringing 10 or so investors with him.

Mr. Mayo already knows what he will be wearing: a dark suit and a tie he bought in Chicago that is blue with some silver strips on the side. “It is a tie even my secretary thinks is too conservative, so I feel it is perfect for this meeting,” he said.

It is rare but not unheard-of for companies to shun or even publicly attack the analysts who cover them. Mr. Mayo, 47, himself says he was shut out of Citigroup in 2002 after raising red flags about Citigroup’s risk management.

In 1990, in one of the most well-known such dust-ups, an analyst with the brokerage firm Janney Montgomery Scott wrote that Donald Trump’s Taj Mahal casino would not succeed. Mr. Trump was furious and threatened to sue Janney unless the analyst backed down or Janney fired him. The analyst was fired. In the end, the casino did file for bankruptcy and the analyst later received a financial settlement.

More recently, another prominent bank analyst, Richard X. Bove, was sued by a bank in Florida that accused him of defamation over a report he wrote. The case was settled three months ago.

At the heart of Mr. Mayo’s concerns is an accounting issue over something known as a deferred tax asset. Companies with losses may have assets that can be used down the road to reduce their tax obligations on future profits. Citigroup’s deferred tax assets are now at $50 billion — twice as large as those at any other United States corporation, Mr. Mayo says.

He says Citigroup has not taken a write-down on these assets even though other companies in similar positions have done so.

“It is aggressive accounting,” he said. Citigroup’s reluctance to take a write-down, “is a window into the risk management practices at the company,” he added. “It is emblematic of a bigger issue, of being overly aggressive.”

A spokeswoman for the bank said: “Citi is very comfortable with the recording of our deferred tax assets. We have provided extensive detail on our D.T.A. in various regulatory filings.”

Mr. Mayo has also taken issue with Citigroup’s public pronouncement that it plans to increase the assets of its core business over time. “I think it is inappropriate to list any target based on growth of assets because it is dependent on outside economic forces, which Citi can’t control,” he said.

The Citigroup spokeswoman declined to comment.

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