Dick Bove is shifting his love from Bank of America to another unlikely contender: Citi (C).
Bove likes the “dramatic change” in the bank’s structure and all the hurdles it has overcome.
Sandy Weill, out. Chuck Prince, in and then out. Vikram Pandit is in but “wobbly.”
There are three, maybe four CFOs in the decade. Middle management is in constant turmoil. New blood is brought in with Ned Kelly, John Grundhofer, and Gene McQuade. There are public fights with the FDIC over management structure.
Then there are those who have called for the breakup of Citi and who “got their way’:
The insurance business is sold. The money management business is sold. The joint ventures are unwound. The brokerage business is sold. Then the ultimate occurs half of the remaining company is put on the block. Citigroup will eventually be 40% of its peak size.
And also, the company’s loan and security portfolios were “relentlessly attacked.”
In the end, the company almost failed. But look at Citi today, Bove says!
It has one of the most impressive top management teams in banking. Its capital needs have been addressed. It has a credible strategy based on the ultimate emergence of its Citicorp division as the only remaining part of the company. It is actually winning some impressive mandates.
The company has an attractive long‐term future as an international bank, he says, a future that will be funded by one of the most liquid balance sheets in banking.
“This is a new company.”