Sandy Weill, arguably the world's most powerful financial-services executive, is taking more big steps to show that he's boss at
Free to do what he likes after edging out his fellow co-CEO John Reed in
February, Weill on Tuesday dismantled another clumsy power-sharing arrangement at Citi in a manner that gives the upper hand to one of his close lieutenants -- at the expense of an ex-Reed protege.
The two co-heads of Citigroup's global corporate and investment bank, which includes the large investment bank
Salomon Smith Barney
, and which accounted for half of the bank's $16 billion of revenue in the second quarter, are being assigned new roles.
Michael Carpenter, who was with Weill at
, which merged with
to form Citigroup in 1998, is now the sole head of Salomon, the largest single contributor to profits at Citi, earning $641 million in the last quarter. Carpenter is also head of the so-called global relationship bank, which lends to large corporations in the developed world.
The other co-head, Victor Menezes, who came from the
side, is now in charge of corporate and consumer banking in the emerging markets, which together turned in revenue of $1.8 billion in the second quarter, just 11% of the second-quarter total. The bank is creating a single management structure for emerging markets. Till now, the consumer and corporate businesses in these nations were administrated separately. The bank didn't say whether Menezes will continue as president of Citibank, Citi's North American banking business.
The decision to demolish the duumvirate comes hot on the heels of the promotion last week of Bob Lipp, another ex-Travelers' colleague of Weill's, to the influential position of co-chairman. Lipp now sits alongside the other two co-chairmen, former U.S. Treasury Secretary
Robert Rubin and Weill himself.
During a conference call in February to discuss Reed's departure, Weill said that he saw no need to divide up Carpenter and Menezes. But in a press statement Tuesday, Weill now explains: "This structure is the natural next step to better-serve the needs of our clients all over the world." Neither Menezes nor Carpenter commented. Neither are considered likely successors to the 67-year-old Weill, who said in February that Citi would try to find his replacement over the following two years.
"This has the ring of Citigroup saying we have got to get this settled," comments Larry Cohn, banks analyst at
, which rates Citigroup a hold and has done no recent underwriting for the bank.
Cohn, however, believes the move makes sense because Carpenter has a lot of developed-world investment banking experience. He was once head of investment bank
, acquired in 1994 by
. Menezes, meanwhile, rose from the emerging-markets side of Citicorp.
Citi's earnings have been strong since the beginning of 1999, as Weill has cut costs and imposed a strong sales culture in many areas. But analysts say that two years after the 1998 merger, Citigroup managers haven't fully achieved their goal of exploiting the opportunities to increase cross-selling across the bank. Cross-selling is the process of getting clients of one unit of a firm buying from another unit. By separating the co-heads, Citi now has clearer lines of responsibility, allowing the co-chairmen to better-identify who is performing well.
What might be next in Weill's remake? Watch the credit card unit, the second-largest revenue generator at the bank. This division has struggled to grow recently, as independent credit card companies grab market share.