The spirited debate between President Barack Obama of the United States and his pal, Jim Yong Kim, president of the World Bank, versus Christine Lagarde, managing director of the International Monetary Fund, and Ban Ki-moon, secretary-general of the United Nations, in the White House became even more animated when the “Senior Elders” (ex-KPMG partners with no gratuity or pension as and when due) presented them with an excellent verdict delivered by Gary Silverman which was featured in the Financial Times of October 22, 2014 under the caption: ‘Ex-chief’s regrets are reminders of an old mistake’:
‘It is hardly surprising that John Reed regrets the recent decision by his successors at Citigroup to close retail operations in 11 countries. It is a reminder of the mistake that he made all those years ago when he let Sandy Weill into his life.
Citigroup was created by the 1998 merger of Reed’s Citicorp, a commercial bank with outposts in scores of countries around the world, and Weill’s Travelers, a more US-focused financial services group that had operations in investment banking, wealth management, insurance and subprime consumer lending.
The project was billed as a financial supermarket, offering all sorts of products and services to diverse clients. It was never as simple as that, but Citigroup was still too complicated and the bank’s difficulties in finding mergers and avoiding trouble have filled the days of regulators, prosecutors and journalists ever since.
What hurts Reed now is that one of his babies is being thrown out with the bathwater – the global consumer bank that he had championed. Reed made his name in retail financial services, charting the course for consumer banking at Citi with his legendary ‘Memo from the Beach’ – so named because he dashed it off while on holiday in 1976.
“We are creating something new,” he proclaimed at as a young banker. “I refer…to the proposition that we can offer a set of services that will substantially satisfy a family’s financial needs under terms and conditions that will earn the shareholders an adequate profit while creating a healthy, positive and straightforward relationship with the customer.”
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As head of Citicorp’s consumer operations, Reed oversaw the installation of the New York City borough of Queens in 1977. As chief executive, he built a global consumer bank like no other. Reed’s language came to resemble that of a retailer or consumer products maker; he wasn’t ripping off faces in the way of the Wall Street traders, as much as he was building relationships.
“Most bankers want to make loans, run branches and sell credit cards, but they don’t identify with customers,” he told the Harvard Business Review in 1990. “We do. We don’t say, ‘Consumers need credit cards’. We say, ‘Consumers need to buy things easily’.”
For all of Reed’s ambition, his retail approach was focused. Citicorp didn’t do everything everywhere. It concentrated on particular segments of the consumer business where it felt it had an advantage, remembers Diane Glossman, a former equity analyst who qualifies as a Citi historian after visiting the bank’s operations in more than 50 countries during peripatetic stints at Salomon Brothers, Lehman Brothers and UBS and a consultant to Citi itself.
“If nothing else, Citi under John Reed had a very clear idea of who their target was,” she said. “The private bank served very high net worth, Citibank was primarily organised for high net worth as defined in various markets and the card was more broadly based.”
Citicorp began to lose momentum before the Travelers deals, Glossman said, but the biggest changes came after Reed lost his power struggle with Weill and retired. The Travelers executives who came to dominate “didn’t value the Citi people’s skills” and found the rigour of the Reed era restrictive.
The Sandyistas pruned management, bid goodbye to Citicorp veterans – and found they had bitten off more than they could chew. “Under the Sandy regime, they were trying to segment the entire market and do business with everybody and that was something they lacked the scale to accomplish,” Glossman said.
The retail retreat followed. Having never fully shared Reed’s global consumer business, vision where knowledge of one place could be applied in others, the temptation developed to shut down retail units in less profitable places as Weill gave way in 2003 to a series of successors as chief.
Citi once had a “first-mover advantage” in global retail banking, Glossman said, but it was squandered. “It’s a shame. I have been to most of the places they have closed and watched them in the initial phases of building out the franchises and it was quite an exciting opportunity in many of the places.”’
In order to reinforce our hypothesis on the same subject, i.e., ‘Applied economics vs high finance and low justice’, we added a video presentation based on ‘I stole goats to maintain my girlfriend – Suspect’, which was on the front page of Daily Sun of November 6, 2014.
Both Jim Yong Kim and Barack Obama are standing lawyers and, overwhelmed with grotesque shock and raw emotion, they shed tears of sorrow for the future generations of lawyers. However, the Cardinal amongst us insisted on chipping in with the front page editorial of the Sunday Sun of November 2, 2014 with the headline: ‘Scandalous Law School results’.
Even more devastating was the intervention by our erstwhile tax partner who proceeded to quote the internet report entitled ‘Why Nigeria remains a toddler at 54 – Odigie-Oyegun’.
My intervention (being a former chairman of KPMG Africa) had widely reported on CNN’s ‘Inside Africa’ under the headline ‘I want to be an armed robber, 3-year-old Ghanaian pupil tells government official’.
President Obama, Jim Yong Kim, Christine Lagarde and Ban Ki-moon demanded a tea break when our former regulatory and compliance partner quoted profusely from Sunday Tribune of September 21, 2014, with the headline: ‘Robbers shoot pastor’s mouth for pleading on daughter’s behalf’.
J.K Randle
