We might expect Mike Mayo, a well regarded banks analyst at Deutsche in New York, to insert the following disclaimer on all future research: “This analyst and Citigroup Inc are not currently on speaking terms.”
The bold headline advice to investors was bad enough – “Downgrade from Buy to Sell” – but it was the accompanying commentary in a rating downgrade issued by Mayo on Friday that seemed calculated to get right under the skin of Citi head honcho, chairman and chief executive Chuck Prince.
The Deutsche move follows news that Mr Prince has unveiled a dramatic management shake up.
A flavour:
Citi’s corporate governance is bad for shareholders 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…
Investment banking moves appear more bureaucratic than not…The market remains to be convinced that the new head of markets, banking, and alternatives will do better based on his prior firm’s track record…
Year of no excuses results in changes that fall short…Given widely-reported investor dissatisfaction with senior management yet a continued absence of change, Citi still has to rise to the challenge of improving the connection between the owners and Citi’s top execs.
Mayo concludes with a flourish:
We believe the current valuation overestimates the ability of Citigroup to monetize its franchise value for the benefit of shareholders. Company risks include management’s ability to achieve a turnaround in execution of strategy.