Citigroup announced yesterday that its current chairman Richard Parsons will be stepping down at Citi’s shareholder meeting in April. As part of a pre-existing succession plan, Michael E. O’Neill, former chief executive of the Bank of Hawaii Corp., will succeed Parsons as the head of Citigroup.
Parsons, 63, became chairman of Citi since 2009 and played an important role in leading the firm’s recovery coming out of the crisis. Previously, he had been on the board for over a decade and a half and took over the chairman position shortly after a $45 billion bailout by the U.S. government. Parsons is known for his political connections and close relationships with officials, according to Mike Mayo, the author of “Exile on Wall Street”, who thinks that this change will be good for Citigroup.
Parsons was quoted earlier saying that “Citi still faces a challenging environment, as do all the large banks, but the crisis is behind us. Given the strong position that Citi is in today, I have concluded that the time has come for me to leave.” Last year, Citi reported a net income of $11.3 billion, up from the $10.6 billion from 2010 and the total losses of $29.3 billion from 2008 and 2009 combined.
Parsons has probably chosen a smart time to leave now, as Citi’s revenue fell 9.5% from a year earlier while expenses increased by 7%, leaving the shares tumbling down 44%. O’Neill will be taking over when the board is trying to deal with lower revenue, higher costs, and unfamiliar regulation as the Vikram Pandit, CEO of Citigroup, continues to push the firm into emerging markets. We can only hope that O’Neill can translate Pandit’s vision into positive returns for Citigroup.
- Jennifer Zhang