Deutsche Bank analyst Mike Mayo slashed his rating on Citigroup ( C) to sell after the bank's latest executive shakeup. Late Thursday, Citi named Vikram Pandit CEO of its Institutional Clients Group -- a newly formed unit encompassing Citi's Markets & Banking and Alternative Investments businesses. Thomas Maheras, a 23-year veteran of Citi and the co-chief executive of its Markets & Banking businesses, is leaving the firm to pursue other interests, Citi said. He will be replaced by James Forese, the current head of Global Equities. The management changes come less than two weeks after Citi announced that third-quarter earnings would plummet 60% from a year ago, due largely to a $3.3 billion hit tied to writedowns in mortgage securities and leveraged buyout debt. But Mayo wasn't impressed by Thursday's moves, arguing that the shakeup didn't go far enough. "Citi's new management moves leaves the Office of the Chairman intact despite performance that has repeatedly fallen short of peers and certain of their operating targets," Mayo writes in a note. He cut his 12-month price target by $16 to $44. Citi shares fell 44 cents Friday to $47.88. Mayo, like others, has been calling for the replacement of Prince in light of the company's poor performance when compared to other large-cap banks, such as Bank of America ( BAC) and J.P. Morgan ( JPM). Prince has been under fire for more than a year to boost performance, with some observers suggesting the bank be split up.
David Hilder, an analyst at Bear Stearns, was more optimistic, saying the changes were necessary since the writedowns "showed clearly that Citigroup's senior management either lacked the understanding or the ability to quickly change the risk profile of its investment bank in a market disruption such as occurred in July and August," according to a note. Still, he cautioned that if Pandit was not successful in his new role that Citi would likely have to resort to more drastic steps. "Although we believe this is short of the more significant senior management change that some investors had been hoping for, we view it as a potentially positive step," wrote Hilder, who rates the stock outperform. "We believe that if Mr. Pandit does not succeed in producing a better combination of lower volatility and at least a peer-average return on capital from the investment bank, Citigroup's board will conclude that a more significant change, at the CEO level, is required." He rates the company at outperform. Other analysts praised Prince's management changes. "Mr. Prince took the appropriate actions," writes Richard Bove, an analyst at Punk Ziegel who rates the stock sell. "He reinforced the concept of accountability by doing so. While he is being criticized for just about everything one can imagine, he continues to make the right moves as CEO."