The slogan may be, “Citi never sleeps,” but judging by this year's performance, Smith Barney reps might think Citi was napping on the job.
This year, Smith Barney tied with Wachovia for third-to-last place with an overall score of 6.3, a sharp drop from last year's 7.6. Despite enjoying one of the most competitive compensation plans on The Street, Smith Barney reps have once again lost faith in firm management. They gave management a 5.9, quite a dip from last year's 7.6.
What has really got advisors miffed is the tanking share price; Citi stock has suffered about a 84 percent decrease from the end of November last year. “I am very displeased with how Citigroup has blown themselves up this year … taking my net worth with them,” says one Smith Barney advisor.
Sallie Krawcheck, former head of Citigroup's Global Wealth Management unit (GWM), which includes Smith Barney and the private bank, seemed to have gotten the brokerage on the right path. But apparently she didn't fit into new CEO Vikram Pandit's vision for the firm. Krawcheck's replacement Michael Corbat will be charged with restoring Smith Barney reps' faith in the firm's direction. In the meantime, they are now reporting to the investment banking division, which means they'll get better access to Citi alternative investments, but they might also feel more pressure to sell them.
The changing of the guard at Citi might be just what the firm needs to get back on its feet. But clearly plenty of challenges remain. In late November, the firm's stock spiraled lower as investors worried about remaining junk owned by the bank; the government was forced to step in and guarantee almost $306 billion in questionable loans that had been held off the books. Before the last upset, Smith Barney advisors we spoke with were planning on staying put. But their patience may be thinning at this point.
Citigroup at a Glance
Company scapegoat: Charles Prince
Share price performance: 11/20/08 price, 52-wk range:
$3.98, $4.39 - $35.29
Q3 net client assets, growth (decline) vs. 07*:
$1.53 tn, (16%)
Q3 advisors, growth (decline) vs. 07*:
Performance of retail unit (Q1-Q3 2008):*
Revenues: $9.8 bn
Pre-tax income: $1.7 bn
Profit margins: 17%
Performance of private bank (Q1-Q3 2008)
Revenue: $1.8 bn
Pre-tax income: N/A*
Write-downs: $60.8 bn
Bank deposits: $780.3 bn
Bank branches: 7,875
*GWM North America — Citi no longer breaks out Smith Barney or Citi Private Bank numbers.