November 16, 2012
Investors Urge Citigroup Board to Consider Breakup of Too Big to Fail Bank
by Robert Kropp
Trillium Asset Management and AFSCME Employees Pension Plan file a shareowner resolution with
Citigroup asking its board to explore a separation of one or more of its business units.
Years after the financial crisis and the taxpayer bailout of banks whose failure would endanger the
economy, Citigroup's shares continue to trade below book value. Vikram Pandit, the bank's former
CEO, was fired earlier this year after shareowners voted against a $15 million compensation package
for him. Also, the bank "failed the Federal Reserveís CCAR stress tests in March 2012, and
regulators continue to forbid it from returning significant capital to stockholders due to concerns
over its financial stability," according to Trillium Asset Management.
with the AFSCME Employees Pension Plan and on behalf of the Benedictine Sisters of Mount St.
Scholastica, Trillium filed a shareowner resolution with Citigroup this week, requesting that its
board of directors consider ways to break up the too-big-to-fail bank.
asked the board to appoint a committee of independent directors to explore and then report on
transactions that could enhance shareowner value, including the separation of one or more of
"There is a gap of almost $50 billion between what Citi says its
assets are worth and what the market is saying," said Lee Saunders, Chairman of the AFSCME
Employees Pension Planís Board of Trustees. "It is high time that the board gave shareholders a
plan for recovering this value."
Appearing on CNBC, Trillium CEO
Matthew Patsky said, "They just fired their CEO, they just put in a new CEO. It's clear that this
board of directors has taken more control perhaps than they have been in the past. We see ourselves
as a fiduciary and an owner and having a role to play."
"I think there's tremendous
support broadly, and if they don't do it, they're going to look at government trying to look at the
whole issue of the systemic risk of the too big to fail banks," Patsky continued. "I would rather
they be at the front of this, moving forward and thinking about it now and taking action and being
one of the first to take action and unlock that value rather than waiting for the government to
"Citigroup boasts many attractive attributes, but remains burdened by
excessive complexity, as well as the stigma and risks associated with being named a 'too big to
fail' institution," Patsky said. "These factors could threaten stockholder return through
breakdowns in risk management, increased regulatory scrutiny, higher litigation expense, greater
capital requirements and poor public perception, among other challenges."
month, the Interfaith Center on Corporate Responsibility
(ICCR) announced that it would rank the major US banks, including Citigroup, according to their
corporate governance performance on such issues as executive compensation, political spending, and
In its annual report, ICCR stated, "While
progress has been made on several fronts, it is difficult not to despair at the seeming
pervasiveness and intractability of the problems facing the industry."
"The vast majority
of these problems can be avoided by adopting the appropriate risk management safeguards and the
requisite checks and balances," Rev. Seamus Finn of ICCR stated. "With each new scandal we think
'maybe this time they will get it,' and then we open the morning paper to see that we still have
work to do. We see the need for increased oversight, and for tools to help us more effectively
communicate and realize our objectives: a stable, reliable and trustworthy financial system."