Citigroup has got a new managerial arrangement in its equities business. Derek Bandeen will still be in charge, but Mike Pringle (formerly head of global equities trading), will now focus on Delta One and Daniel Keegan will become head of cash equities globally. Simon Yates, who had been head of equity derivatives for the Americas, is becoming head of equity derivatives globally.
So far, so normal: several banks have been restructuring teams this month. However, in Citigroup’s equities business, the changes are said to be causing a lot of apprehension.
Citi’s EMEA equities businesses – both cash and equity derivatives – underperformed in 2011. Equities revenues dropped more than 70% for the second straight quarter in the final three months of the year. Citi has been open in declaring that equity derivatives in particular, “underperformed.” Bonuses are said to have been non-existent or down 70%.
The new equities management structure is therefore feared as the prelude to a mighty cull.
“The internal rumour at Citi is that the equities business is under strategic review with cuts coming up,” says one equities headhunter. “Redundancies of up to 30% will be announced at the end of March, supposedly,” he adds.
At worst, the fear is apparently that Citi will close entire areas of its equities business in the style of Credit Agricole, Unicredit, or RBS. Hopefully, this is overdone.
Some areas of Citigroup’s equities operation did comparatively well last year: in equity research it moved from 10th to 6th placein the Institutional Investor rankings.
Nevertheless, events at Nomura underscore the predilection of new management for stamping their authority on matters. Steve Ashley was made head of fixed income in January. Yesterday, it was revealed that 30 fixed income managers had lost their jobs to, “help drive the next phase of global growth.” Whilst firing, Nomura is also said to have been hiring in fixed income, suggesting Ashley is engaged in covert upgrading.