John Gerspach, CFO of Citigroup, was the topic of much conversation during a recent episode of CNBC’s “Halftime Report.” Analyst Mike Mayo has been tracking the CFO’s progress ever since Gerspach was brought on board as CFO in 2009. After the show aired, many were forced to recall the time in 2013 when Citigroup was reporting double digit jumps in profit. So, what happened? That’s what Mayo and other analysts are trying to figure out. What a Difference a Year Makes
Last April, Citigroup announced a stunning 30% increase in profits when compared to the previous year. This startling news came shortly after the company was denied its capital plan. As Mayo points out, Gerspach has been with the company through financial crises and so far doesn’t seem to have helped the situation. Mayo’s opinion of Gerspach’s professional fate stems from the Federal Reserve’s denial of Citigroup’s plan to “increase dividends and stock repurchases,” as discussed by CNBC’s panel of analysts.
Is Citigroup being Too ‘Cocky’?
Citigroup’s proposal to the Federal Reserve is being deemed “aggressive” with Jim Cramer of CNBC calling the company “very cocky.” Armed with a bold plan of action, Citigroup met with the Federal Reserve to ask for a stock buyback program exceeding $6 billion and a quarterly dividend of 5 cents per share, as reported by CNBC. Because of concerns over Citi’s ability to weather a global economic decline, the Fed rejected Citigroup’s proposal.
At this point, it’s unclear what Citigroup plans to do, but CNBC’s Cramer has a few ideas. Namely, he reports, “The smart thing for them to do is to issue a huge number of shares right now at $45.” Ultimately, experts believe Citigroup’s next move should include raising equity. But, will that help with Gerspach still on board?
The Future of Citigroup’s CFO
It’s too soon to tell how Citigroup plans to pick up the pieces, but analysts are speculating it will have something to do with Gerspach’s dismissal. For now, the finance world awaits the draft of Citigroup’s next plan to recover from its 8.4% deficit.
What do you think will happen to Citigroup’s CFO?