Morning Coffee: Questions asked about Citi's senior banker exodus. The woman to know if you want a hedge fund job

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Jason Cuttler Citi

In a surprise move, Citi president Jamie Forese, long known as the heir apparent to CEO Michael Corbat, announced Wednesday that he is leaving the bank at just 56 years of age. His exit appears completely voluntarily, though questions remain why he is choosing now to walk away. Potential reasons for his exit are sparking additional intrigue.

As head of Citi’s Institutional Clients Group (ICG), which contains its investment banking and trading units, among others, Forese and his division were ultimately responsible for generating roughly half the bank’s totals revenues in 2018. ICG revenue had increased more than 10% under Forese. A source told the Financial Times that Forese, who has spent over three decades at Citi, didn’t want to wait another three to five years for Corbat, 58, to retire, and that he wanted to leave the bank “while things are going well.”

Whether that comment portends bad news is debatable, though Citi’s chief financial officer recently warned that trading revenues fell in the first quarter following a Q4 where fixed income trading revenues plummeted by 21% compared to year earlier. Much of the damage occurred within Citi’s Asia-Pacific division, which suffered a $180m trading loss in the fourth quarter. Francisco Aristeguieta, CEO of Citigroup Asia, is also leaving the bank, according to a company memo.

Meanwhile, a different source told Bloomberg that Forese had become frustrated with not having his voice heard over the direction of the bank’s consumer division. That frustration reportedly mounted after Corbat wasn’t named chairman last year when the seat opened – a move that Forese felt would provide him more influence, the source told Bloomberg. The elevation of Corbat to chairman could also have conceivably provided motivation to push up his timeline in naming a successor as CEO.

“To many of you, the timing of my decision might come as a surprise, to others perhaps less so,” Forese wrote in a letter to Citigroup staff that may only heighten speculation over his departure.

Either way, Citi has seen a mass exodus of senior executives over the last year of the kind that typically only occurs when a new CEO his named (see Goldman Sachs since David Solomon took the helm). Counting Forese and Aristeguieta, eight of Citi’s 14 executive officers as of last February have now left or are on their way out. Forese’s deputy, Paco Ybarra, will take over leadership of ICG on May 1.

Elsewhere, the Lincoln Center’s annual Alternative Investment Industry Gala took place this week, featuring big-name hedge fund managers like Steven Cohen, Neil Chriss and Steven Tananbaum. But they weren’t the main focus of the event, which raised $1.7 million for charity. The gala honored Ilana Weinstein, founder of executive search firm IDW Group.

“I work with her all the time. She’s tenacious. Irrepressible. Whatever it takes, she gets it done,” Cohen said of Weinstein during his speech, before half-jokingly suggesting Weinstein is the force behind rampant talent poaching among hedge funds. “I was sitting there the other day going, ‘This is weird, nobody benefits,’” Cohen said of the industry’s recruiting war. “And then it hit me that there’s one person who benefits all the time -- it doesn’t matter which way they’re going, she does well.”

All jokes aside, Weinstein seems to be the person to know if you want to get a job on the buy-side. Anyone who can convince Steven Cohen to make jokes on stage has some panache.

Meanwhile:

Citi announced other leadership changes in addition to Forese’s departure. Carey Lathrop, chief operating officer for Citibank NA, and Andy Morton, global head of G10 rates, markets treasury and finance, have been named the new co-heads of the bank's markets and securities division. Mary McNiff, Citi’s chief auditor, has been appointed the new head of Citibank NA. (FT)

Goldman Sachs’ new fixed income trading strategy includes courting more asset managers, brokers and non-finance corporations. The bank is looking to diversify its client base, which has historically been dominated by hedge funds. (FT)

The public spat between Barclays and activist investor Edward Bramson was elevated on Wednesday when the bank called Bramson’s understanding of the bank “simplistic and flawed.” The comments came after Bramson sent a letter to fellow Barclays shareholders urging them to elect him to the board next month. Bramson, who maintains a 5% stake in Barclays, has been pushing the British lender to take a knife to its investment bank. (Financial News)

Shareholder adviser Glass Lewis has urged investors to reject UBS’s compensation proposal, which includes $14 million in pay for CEO Sergio Ermotti. UBS shares were down 32% last year and Ermotti has signaled that the first quarter of 2019 may have been a rough one. (Bloomberg)

Commerzbank Chairman Stefan Schmittmann dismissed reports that some board members want to oust CEO Martin Zielke and end merger talks with Deutsche Bank. He said the rumors were “made up out of thin air.” (Reuters)

New jobs openings at U.K. fintech firms were up 61% in 2018. And fintechs have been even more active through the first three months of this year. (Bloomberg)

Democratic Rep. Alexandria Ocasio-Cortez grilled J.P. Morgan Chief Executive Jamie Dimon during a committee hearing that included the CEOs of many of the biggest U.S. banks. She pushed Dimon on whether more people should have gone to jail for their role in the financial crisis. Dimon had previously criticized aspects of Ocasio-Cortez’s Green New Deal proposal. (NY Post)

Former Barclays CEO Bob Diamond has hired a familiar face to join his investment firm. Tom King, head of Barclays investment bank through 2016, has been named a partner at Diamond’s Atlas Merchant Capital. (Financial News)

Small banks are becoming frustrated with three “core service providers” that act as the backbone of the modern banking system’s infrastructure. Fiserv, Fidelity National Information Services and Jack Henry Associates combine to provide much of the technology utilized by smaller banks, making them extremely reliant on the small group of service providers who have reportedly taken advantage of their position with onerous contracts, according to some industry groups. Lawsuits have been filed and banks have begun looking to smaller fintech companies as alternatives. (WSJ)

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