(Adds Jay Leno comment, detail from conference call, closing
By Joseph A. Giannone and Dan Wilchins
NEW YORK Jan 27 Citigroup Inc (C.N), battered
by massive losses that forced a government bailout, named a
chief to temporarily oversee assets it is looking to shed, and
scrapped plans to buy a $50 million jet that politicians called
Once the world's largest bank, Citigroup has been humbled
by more than $28.5 billion in net losses in the past 15 months,
including $8.3 billion in just the fourth quarter.
Amid concerns the government might nationalize the bank,
Citigroup said earlier this month it will separate its main
banking operations from units it is looking to shed or close
down over time.
On Tuesday, Michael Corbat, former head of the bank's
brokerage business, was named interim chief executive of Citi
Holdings, which will include the bank's brokerage, consumer
finance and troubled assets.
The unit will include $850 billion in assets, or 44 percent
of Citigroup's total of $1.95 trillion, which will remain on
Citigroup's balance sheet. About 100,000 employees, will work
for Citi Holdings, Citigroup CEO Vikram Pandit said on a
conference call. That would be about one-third of the 300,000
the bank expects to have when it finishes a round of job cuts.
Roughly $301 billion of the troubled assets were guaranteed
by the U.S. government as part of a November rescue package.
Rick Stuckey has been named to manage the troubled asset pool.
"We've done the math, and Citi Holdings has positive
value," Pandit said.
The market is not convinced that Citigroup as a whole has
value apart from the government capital it has received. The
U.S. has shoveled $45 billion of capital into Citigroup since
October, including an emergency $20 billion infusion in
November. Citigroup's market value is now only about $17
After giving Citigroup so much money, the government is
exerting significant pressure on the bank. Regulators pressed
Citigroup to raise capital, which spurred the bank to sell a
controlling stake in its Smith Barney brokerage to Morgan
On Tuesday, Citigroup dropped plans to buy a $50 million
executive jet that it ordered in 2005.
A person familiar with the matter said the bank placed a
deposit on the jet when it agreed to buy it. The size of the
penalty it pays for not buying the plane is still being
negotiated, the source said. Citi had planned to buy a Dassault
The company had said Monday that it was financing its
purchase of the plane, by selling older jets, and that the new
aircraft was more fuel efficient and would help reduce costs.
The jet became a lightning rod for criticism. A White House
spokesman said U.S. President Barack Obama did not believe
using private jets was "the best use of money" by companies
receiving taxpayer assistance.
U.S. Senator Carl Levin, a Michigan Democrat, had publicly
opposed the jet purchase. On Tuesday he said, "I'm glad they
have changed their minds."
Citigroup's plans to buy the jet attracted the scorn of the
normally genial American comic Jay Leno, the host of NBC's
Tonight Show who referred to the bank in his monologue Monday
"If there's ever a reason to reopen Guantanamo Bay, this is
it. That's our jet. We should be taking that. They (Citi
executives) should be on Southwest," Leno said.
Citigroup shares rose 22 cents to $3.55 Tuesday on the New
York Stock Exchange.
Citigroup's commercial and retail banking businesses and
credit cards will be housed in a unit called Citicorp.
"I cannot think of a stronger stand-alone financial
services company" than Citicorp, said Pandit, who vowed "to
restore it to the proper luster it deserves."
In an internal memo obtained by Reuters, Citigroup
announced other management changes.
John Havens will lead Citicorp's global institutional bank,
while Terri Dial was named global head of consumer strategy and
CEO of North American consumer banking. Also, Ajay Banga will
be Citicorp's CEO of Asia-Pacific.
Other regional heads for Citicorp will include Manuel
Medina-Mora for Latin America and Mexico, and William Mills for
Western Europe, Middle East and Africa, according to the memo.
U.S. companies are being pressure by shareholders and
politicians to slash executive perks as a shrinking economy
triggers hundreds of thousands of job losses each month. About
2.5 million jobs were lost in 2008, the worst year since 1945.
Last month, automakers seeking government aid were
pressured by lawmakers -- as well as by public outcry -- to
stop using their executive jets.
Last year, insurer American International Group Inc (AIG.N)
was pilloried for spending hundreds of thousands of dollars on
luxury executive retreats -- even after receiving a bailout
that later grew to $152 billion.
(Reporting by Dan Wilchins, Juan Lagorio and Jonathan Stempel;
editing by Steve Orlofsky, John Wallace and Jeffrey Benkoe)