Jessica Weill Bibliowicz ?

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Sanford Weill, "The French market has long interested us"
Les Echos No. 18927 of June 18, 2003 • page 26
A seventy years, Sanford Weill, who presides over the first financial institution in the world, is the mentor of the "All Wall Street." In his first interview with a French newspaper, he discusses what makes the strength of the "model" Citigroup, established in 1998 by creating the first global platform of financial services through the merger of Citicorp with Travelers. "Sandy" Weill, whose success story has been tarnished by the prosecutor's investigation of New York, Eliot Spitzer, the practices of U.S. banks, today defended the actions of his group, especially in terms of governance company, and recently criticized by a survey of the Corporate Library. Citigroup's boss finally delivers a message of cooperation between the business French and American.

Do you fear a risk of deflation, or do you believe in an imminent recovery in the U.S.?

Despite the recession and the bursting of the bubble, the United States contain many sources of growth and competitiveness. The fall in interest rates has allowed individuals to renegotiate their mortgages. Less financially squeezed, they have shifted the cash generated to other purchases or investments. The consumer is doing quite well, especially since people feel better since the U.S. began to win their war against terrorism.

Other factors are also boosting the morale of Americans. Tax cuts, for example. No one expected that they apply as quickly. They should have an impact in the home in the third quarter and reactivate the economy. The taxation of dividends, from 35% to 15%, will also boost the market growth. Companies will be encouraged to pay dividends instead of creating shareholder value by repurchasing their own shares or through acquisitions. It may well be that in two to three years, the tax rate on dividends continues to decrease until it disappears completely in six years.

Overall, I am rather optimistic about the prospects for the U.S. economy. I do not see no risk of deflation or big threats. The monetary authorities inject a lot of money in the system.

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How is Citigroup in this context?

Citigroup is the financial institution the most diverse in the world in terms of products and services. Since we merged Citicorp and Travelers in 1998, our business model works well and meets both individual customers as companies or states. We provide financial services to all those who, like us, believe in freedom of world trade and open markets. We have the largest balance sheet of the financial industry, perceive the most important sector revenue and provide our products and services worldwide.

This explains your work?

We have taken advantage of our development model and registered record numbers in 2001, 2002 and the first quarter of this year. Our market capitalization is around $ 232 billion, which is a lot compared to our major competitors, who take as much risk as we are. Since the creation of Citigroup, four years ago, our revenues increased by $ 26 billion, we spend 8 billion only. The benefits of the merger are significant. We have become more efficient, consolidated our costs and invested in technology so that we develop custom software and to deal in the world.

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Still, the question of your estate has been mentioned several times ...

The most important for a CEO is to have a strong management team. I hope that when I retire, my successor already working at Citigroup. We will disclose his name in due course, once ready ... The difficulties are in fact not missed in recent years. The merger of Citicorp and Travelers was held the same year as the Russian crisis. We had to rely then with the Internet bubble burst, the terrible attack of September 11, 2001, the Latin American crisis, particularly in Argentina, political uncertainty in Brazil, accompanied by financial scandals bankruptcies, Enron WorldCom ... Finally, the problems of corporate governance brokerage firms relative to porosity between research departments and investment banks. Because it is global, Citigroup is facing problems in proportion to its size.

What improvements have you made to your corporate governance?

Many! We have created a special committee within the board. It is composed of 14 members, including two-thirds of independents. Another committee monitors compliance with trade practices, to prevent deviant behavior. We also revised our wages policy. The 150 senior executives ("senior management") whose compensation includes stock or stock options are now required to keep their titles (at least 75%) or not to exercise their right to option in the long term, once they have left the group. They can not realize gains and leave the company soon after. We also reformed our pension system. We are the first to have done as much. This is proof that we realized the magnitude of the problems. We want to apply the best rules of corporate governance with a view to regain the confidence of investors and clients.

And the solution adopted in research ...

There was a clear need for more transparency. We made our independent research entity and placed his head Sallie Krawcheck. This young woman, former CEO of Sanford C. Bernstein, a company that works independently of investment bankers, knows the value of independent research and the quality of advice to dispense. We are the first to have developed this model.

Financial institutions have they their troubles behind them?

The issue of credit risks has reached its peak. It began in late 2000, continued in 2001 and worsened in 2002. The biggest challenges will be resolved in the coming years. Leaders of groups that have reacted quickly and decisively effective partners are Bankers. In France, for example, the case of Jean-Rene Fourtou with Vivendi Universal. In today's economy, the issue of the credit cycle is difficult. Everything will depend on the timing of economic recovery.

The bank still needs consolidation. What lesson did you learn from your multiple merger?

Everywhere, the market grows to consolidate regional, national, cross-border. Customer demand is stronger and sophistry. It is not easy to group companies and the emergence of a unique culture. Do not underestimate the problems of cultural or difficult to operate all the different computer systems. A merger is not without stress and mess before it reaches the desired size. In our case, it's all behind us. Financial reform of 1999 (the abandonment of the Glass-Steagall Act, Ed) gave us this chance. Our culture is now unified and we operate with a large capital base. This is an important competitive advantage.

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Are you planning to further increase your network in the U.S.?

Over the past four years, we have tried to sell more products to our existing customer base. This allowed us to maintain our margins. We also completed two acquisitions, the former network of European American Bank (formerly a subsidiary of ABN AMRO) in the State of New York and Golden State Bancorp in California, in November. We could possibly be interested in an additional network in the U.S., but that does not mean that we will do tomorrow.

At what horizon you see the return of mergers and acquisitions?

The market does not favor this time. The United States served as a very active field of mergers and acquisitions in the second half of the 1990s. We are experiencing today a period of correction. In 2002, France attracted more foreign direct investment that the United States.

Precisely, what are your goals in Europe?

Citigroup is the only financial institution of U.S. origin to total $ 9 billion in revenue in Europe. The euro area will soon have 22 countries, giving it an economic impact greater than that of the United States. We realize, however, 60% of our profits in the U.S. and 10% in Europe. Our ambitions are so great.

Bank financing and investment, we have started with Smith Barney, the latter acquired Salomon Brothers in 1997. Then there was the birth of Citigroup in 1998 and in 2000, the redemption of the investment banking business of Schroders UK. Such an assembly requires time before its effects. In retail banking, our largest acquisition is Bank Handlowy in Poland. Citigroup is open to any opportunity, even in markets not too competitive, private bank or in the field of credit cards.

What benefit do you get your political cross-selling in France?

We have a powerful platform for the acquisition of Schroders. Over the past two years, the investment banking business has grown by 100%. The number of terms where Citigroup has been a leader or "senior adviser" has increased significantly. Our clients include groups like AXA, Carrefour, EDF, France Telecom, Vivendi Universal, Credit Lyonnais. The combination of financing capabilities, an extensive distribution network and an advisory capacity allows us to play an important role of the largest hex.

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Market rumors you lend an interest in Societe Generale ...

I never comment on rumors about specific cases.

The French market can be of interest in retail banking?

The French market has long interested us. It is a very dynamic market in which we operate for many years. It is a great country with a bright future. We are of course always, in every country, listening to potential opportunities.

How do you assess relations between the U.S. and France?

France and the United States have been partners since the birth of the United States. We won all the World War II. Recently, relations have eased. Both countries, however, need each other. Last night, Don Evans, U.S. Secretary of Commerce, delivered a speech at the dinner hosted by Jean-Pierre Raffarin in honor of the Franco-American affairs. Close friend of President Bush, he made the round trip between the two countries (he left the next day after dinner along with the French Prime Minister, Ed) to deliver a strong message. He was very positive about the prospects for long-term relationships between the two countries.

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Citigroup, or life after Sandy Weill

April 18, the iconic president of Citigroup gives way to Prince Charles.

Thursday, July 17, 2003. Sanford I. Weill, 70, CEO of Citigroup and legendary figure in American finance, announced his decision to bow out. Against all odds, he entrusted the general management, or more precisely the position of chief executive officer, Charles "Chuck" Prince, from the end of the year. The New York Times makes him the best tribute of all: anyone who placed

$ 10,000 in the company of consumer credit public offerings by Sandy Weill in 1986 would end up seventeen years later at the head of a heritage ... 334,349 dollars in Citigroup shares, the newspaper reported.

The staff has invited the press to a conference call to discuss the succession. "It will be strange not to be harassed, pushed, encouraged (by Sandy Weill) every morning," suggests Chuck Prince. "What makes you think that I do not do it again? "Sandy Weill asked him once. "Maybe one day on two ..." implored Prince. After such a journey would have been surprised to see Weill and hang him, the Jewish boy from Brooklyn, started with nothing and now head of a group weighing nearly 1500 billion of assets ?

Bulimia acquisitions

But this time it's the right one. April 18, the General Assembly of Citigroup will elect a new president: Chuck Prince. Sandy Weill will be longer than the "chairman emeritus." The output is not as prestigious as it could be. In recent months, Weill negotiated step by step the conditions of his departure with the board. His contract provided he could continue to receive lifetime aircraft Citigroup and other benefits, including personal protection. However, Sandy Weill will launch an investment fund with, among other partners, the Saudi Prince al Walid, one of the principal shareholders of Citigroup. But the bank can not be seen as supporting activities that benefit another company ... The two parties finally compromised: Weill will travel at the expense of Citigroup for a period not exceeding ten years ....

The fact remains that the race that will end next Tuesday has been one of the most significant four decades on Wall Street. It would be exaggeration to say that Sandy Weill has transformed itself American finance. But few have left such a mark.

It all began in 1955. Weill is 22 and about to get a degree from Cornell University. Then it will be his father's business of importing steel. But this great project collapses, his father sold the company and left home. Everything is redone. Weill got a job as messenger on Wall Street. He earns 35 dollars a week. Less than a year later, he is a broker. A profession which he reaches the summit in just over two decades, a sudden - now - acquisitions. In 1981, the entry in the big leagues, with the merger to 900 million in Shearson, the securities firm headed by Weill, with American Express. Problem: there is only one chair for two, and the boss is American Express, James Robinson. Sandy Weill will take four years the number two position, leading the expansion of American Express in insurance with the acquisition of IDS, then with the recovery of Fireman's Fund. In 1985, he threw in the towel. And initiates the construction of a new empire.

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Rehabilitate organic growth

Citigroup will build him twelve years. It starts with a company of consumer credit in Baltimore, Commercial Credit, a string of acquisitions, buying up the passage at Shearson American Express, taking control of the insurer Travelers, and the investment bank Salomon, it merges with the securities firm Smith Barney, creating the world's second largest investment bank. The final step will be the most spectacular in April 1998, Sandy Weill, head of Travelers Group and John Reed, CEO of Citicorp, today announced the largest merger in history. Again, there is only one chair for two. Weill will not commit the same mistake twice: in February 2000, John Reed, who is leaving. Weill, who also dismissed his heir apparent and quasi-spiritual son Jamie Dimon, until 2003 will be the only master on board of an empire that is now worth 237 billion dollars in stock market, has made a net profit of nearly $ 25 billion in 2005 and employs about 300,000 people in a hundred countries.

And now? In an interview in December 2004 at the Harvard Business Review, Chuck Prince was tracing a path which he has not deviated from, setting forth three priorities. The first is growth. Prince hears that his troops are "not satisfied with what we have today," do not stick to "manage a museum." In the eyes of its new CEO, Citigroup may grow again, but this growth will be of a different nature. "We were taken for the acquisition of drug addicts, he admits. Prove that we are able to grow organically we need. "In a smaller scale, the appetite for acquisitions remains, especially abroad. Citigroup was in the running for the acquisition of Finansbank, the eighth Turkish bank eventually fell into the hands of the National Bank of Greece. Above all, the American giant is a candidate for a majority stake for about $ 3 billion, the Development Bank Guangdong, China, competing with Societe Generale.

In addition, Citigroup has $ 15 billion of its cash dispostion. And the way is clear recently. On April 4, the Federal Reserve has lifted the ban imposed a year ago to make new acquisitions as the group would not have put in place appropriate procedures for risk management and regulatory compliance, the famous "compliance."

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The new president will have to convince the stock market

Compliance is also the second priority of Chuck Prince, and for good reason. Citigroup ended up in the sights of London authorities for its trading practices on obligations (see box below), had to close its private bank in Japan and is being investigated by the Australian policeman stock.

"John Reed, likes to remind Chuck Prince, used to emphasize that the most important part of a race car, it is the brakes. You can not go fast without the ability to stop. "From this point of view, progress is needed. Prince has chosen to number two lawyers - like him - Lewis Kaden, a law professor at Columbia, which now has control over all proceedings of the house.

But the third priority is the most important, the only truly worried the new boss to motivate the employees of the group to expand their business, while being ethically irreproachable. "There are no courses where you learn to handle 300,000 people in 100 countries speaking 50 languages," says Chuck Prince.

In less than three years, Prince has clearly established its brand, method, and ensures that the shadow of Sandy Weill less overwhelming as it could be when it gives up the presidency of the Board administration. The hard part lies ahead. If Chuck Prince in doubt, he would hear the message from investors: the title Citigroup lost 7% in two years - while the S & P rose during the same period by 15%, reminded Wall Street Journal on April 7. Deprived of its architect, the leading financial group in the world is he capable of displaying financial performance to match its status? The market wants to see.

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