Buy Stock in Citigroup Because of Corbat

If you want to crack the code of a company -- to really understand what makes it tick as a business and as an investment -- one of the things you have to get your head around is who's at the top: the person making the day-to-day and long-term decisions that will eventually make or break the company, and possibly your portfolio.

For Citigroup (NYSE: C  ) , that person at the top is CEO Michael Corbat. Here's the first of two articles taking an in-depth look at this relative newcomer to the superbank's top spot: where he came from, some of the important decisions he's made, and why you could arguably buy stock in the country's third-largest bank solely because of his ascendancy to CEO.

Citi's made man
Corbat is a Citigroup lifer. He's been with the bank for nearly 30 years and by all accounts is a "banker's banker." There's nothing flashy or showy about him. He doesn't have the big mouth and bluster of JPMorgan Chase (NYSE: JPM  ) CEO Jamie Dimon, nor the knowing smirk and achingly dry wit of Goldman Sachs (NYSE: GS  ) CEO Lloyd Blankfein.

In lieu of these more-typical master-of-the-universe traits, and much to his credit, Corbat has a palpable sereneness and steadiness: forged in his long and storied service with Citigroup. And based on some of the positions he's held there, the man certainly must have some stories to tell.

His most high-profile position at Citigroup was his tenure as head of Citi Holdings: the "bad bank" spun off in the wake of the financial crisis to house the then-floundering superbank's most poorly performing assets, along with the "non-core" lines of business Citigroup wanted to eventually get out of. The cleanup of Citi Holdings has been critical to the bank's post-crash restructuring, and Corbat was there to be Citi's shepherd in that particular valley of financial darkness.

Most recently, Corbat was head of Citigroup's EMEA operations. EMEA is short for Europe, Middle East, and Africa. This is an axial post for Corbat to have held: In my opinion, in mature markets like North America and Europe growth almost inevitably has to come from overseas. In the first quarter of 2013, 53.1% of Citi's total revenue was generated in EMEA: clearly making expertise in overseas operations highly valuable in a CEO.

JPMorgan is Citi's top big-banking competitor for global growth, with roughly 48.1% of its first-quarter revenue coming from overseas. At least Bank of America (NYSE: BAC  ) isn't as much in the running for global growth: only 18.1% of its first-quarter revenue came from overseas. Wells Fargo (NYSE: WFC  ) isn't even in the game, with only 3% of its first-quarter revenue generated overseas.

Foolish bottom line
One final note: Corbat's ascension to CEO wasn't a pretty one. In fact, it was particularly bloody, though you can't blame it on Corbat.

Vikram Pandit was Citigroup's previous CEO, and while it was clear that he and Chairman Michael E. O'Neill didn't see eye-to-eye on everything, Pandit's overall performance was solid. But Pandit's October 2012 ouster by O'Neill was unusually swift and ruthless. Is this the fate that potentially awaits Corbat? This new, highly capable leader of Citigroup?

Potentially, yes, O'Neill could one day put his considerable energies into Corbat's takedown, in the same way he did for Pandit's. But Corbat was handpicked by O'Neill, and so far the two appear to be seeing eye-to-eye. It's unlikely O'Neill would have picked anyone who didn't see eye-to-eye with him. That could change on the part of either, but so far, so seemingly smooth.

Corbat's extensive background in various parts of Citigroup's vast empire make him an optimal candidate to complete the superbank's transformation from financial-crisis basket case to lean, mean banking machine: one that generates worthwhile returns to shareholders.

Stay tuned for Part 2 of this series on Citigroup's leadership, where we'll take an in-depth look at the decisions Corbat has made since he became CEO, completing my case you could buy stock in Citigroup based almost solely on the fact that Corbat is the man at the top. 

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