Please ensure Javascript is enabled for purposes of website accessibility

1 More Reason to Buy Stock in Citigroup

By John Grgurich - Apr 25, 2013 at 2:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

CEO Michael Corbat continues to impress

I've written before about Citigroup's (C 6.07%) Michael Corbat and the way he continues to impress me since he took the reins as CEO last October, after Vikram Pandit was unceremoniously ejected from the position.  

Yesterday, at the bank's annual shareholder meeting in New York City, Corbat made a statement that demonstrated to me yet again why he's the man to take Citi to the next level and why investors should get on this train before it gets too far out of the station.

Bad bank
Citi Holdings is Citigroup's "bad bank." It was created in the wake of the financial crisis to hold the superbank's toxic assets, along with the faltering and non-core lines of business Citigroup eventually wanted to be rid of.

But although Citi Holdings is off in a corner, trying to go unnoticed, it's not off balance sheet. As such, investors have long complained that it's not being wound down quickly enough and is a drag on Citigroup's overall performance.

Good solution
So at yesterday's shareholder meeting, his first since becoming CEO, Corbat had this to say regarding investor hopes for a quick wind-down of Citi Holdings: "It makes no sense... to destroy our capital simply for the sake of speed."  

Just last week I wrote an article in praise of Citigroup's slow winding down of Citi Holdings, and compared it to JPMorgan Chase's (JPM 6.19%) London Whale situation. CEO Jamie Dimon could probably have wound down the London Whale's outrageously large derivatives position sooner than he did, but rushing the job might have ended up costing the bank more than the $6 billion it already has.

Corbat's commitment to wind Citi Holdings down at a pace consistent with minimizing loss, even in the face of investor pressure, is impressive and tells me he has the best interests of the business at heart. Well done, Mr. Corbat. Keep building a good bank, and the investor dollars will follow. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$52.77 (6.07%) $3.02
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$124.60 (6.19%) $7.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.