Sunday, October 14, 2007

Citigroup's Chuck Prince is Safe

Citigroup's (C) Chuck Prince has been much criticized of late in the business press.Something about two white guy's fighting keeps getting trotted out. Everyone is using him as a whipping boy for what they think is wrong with Citi. The financial concern called Citigroup has approximately 327,000 employees (including the mail room guys). But its only Chuck Prince's fault.

If the board pulled the plug who would they go to next? Large banks like this do not operate with interim managers until the board finishes interviews. Then how many other senior guy's would you need to assassinate to clear the decks and create this so called new strategy that everyone else wants. You are talking about hundreds to really make it work.

That's why it can only be done incrementally. Sorry hedge fund guys not everything naturally operates in hyper speed just to skate your latest trade on side. The Saudi's like him. The Japanese thing looks really interesting. The sub prime problem got everyone so you cannot call it a Chuck Prince thing.

Huge money center banks are not just another basket of stocks. The CEO's can get their Central Banker on the phone anytime they want. Same thing if they want to speak to the Treasury secretary. Rapid changes would be more disruptive and dangerous than beneficial.

Watch for Chuck Prince to move into a compelling new role in the next year such as say ambassador to China under the new administration in about a year. That way it does not look like a kick in the pants which would only demoralize the entire structure of Citigroup.

In the mean time try to enjoy the 4.5% dividend yield