Citigroup’s chief executive Chuck Prince is worried about his company’s culture. Too many scandals – upsetting the authorities in Japan, a bond trading debacle in Europe – mean there is a need to restore Citigroup’s reputation for ethics. “We need to change the way we do business,” he explains.
Changing the world’s largest bank is no easy task, especially when some of the bank’s problems are attributed to the series of acquisitions that put it together in the 1990s and the legacy cultures that came with them. Mr Prince’s response has been to issue a five-point plan outlining initiatives on ethics and code-of-conduct training. These include an in-house movie of The Story of Citigroup.
Mr Prince does not want to upset the performance-based culture that produced $17bn in net income in 2004 but he also does not want to suffer the abuse of governments from Japan to Europe. Can he make it happen?
One underlining strength of Citigroup and its international network has been the breadth and experience of its management. The group operates in over 100 countries and its senior management had reflected that diversity.
Banking is a relationship business and Citigroup had the cultural diversity and experience in its management to cope with the political challenges of a global network. It is not clear, however, that Citigroup under Mr Prince has maintained that multicultural diversity in its management.
Today senior management reflects a far more New York-centric approach, which may explain some of its problems. US executives that are well versed in New York ways may go down well in Washington but may not be so effective in the wider world. New York may appear to be the centre of the world but on a global scale it does not necessarily reflect the diversity of a truly international institution.
The story of Citigroup has been its broad international experience. Today’s senior management appears short on this key factor and the recent loss of vice-chairman Stanley Fischer (to the Bank of Israel) does not help. Mr Prince is right when he says Citi needs to change the way it does business. He needs to bring on board executives that have genuine global experience that can spot the problems before they occur.
