Citigroup Inc Chief Executive Vikram Pandit stressed the bank was now focusing on responsible finance, a comment that comes as rival Goldman Sachs wrestles with legal woes.
Pandit, speaking at Citigroup's annual meeting, said responsible finance is the driving force behind the culture of the new Citi, and it is defined by the interests of our shareholders, customers and colleagues.
Pandit has mentioned responsible finance in the past, but the comments have new meaning days after the Securities and Exchange Commission charged Goldman Sachs with defrauding customers in a complicated subprime mortgage transaction. Goldman has said it did nothing wrong and will defend itself.
Obviously he's taking advantage of the Goldman Sachs situation to talk about that -- it's clear that they're trying to distinguish themselves from Goldman, Ralph Cole, portfolio manager at Ferguson Wellman Capital Management in Portland, said in a telephone interview. Ferguson Wellman does not own Citigroup shares.
Banks failing to put customers first was the reason behind much of the financial crisis and the attendant destruction of shareholder value, Pandit said.
The Citigroup CEO is trying to rebuild shareholder value at the bank, and some investors at the annual meeting were more optimistic than in prior years.
They're moving in the right direction, said Ron Davanzo, an individual investor from Stamford Connecticut, at the meeting.
The annual meeting mainly attracts individual investors, who were vituperative when complaining about how the bank's shares used to trade at more than $50 apiece and now trade at less than $5.
Investors complained about prior management and, on at least two occasions, hissed at the mention of former adviser and director Robert Rubin, who served as secretary of the Treasury under the Clinton administration.
But some investors praised Pandit for starting to turn around the bank.
I applaud Mr Pandit's leadership and I know your heart is in the right place, said an investor, who took the microphone and identified herself as a former employee.
As expected, shareholders voted in every director, and approved every management proposal, including those authorizing more share grants to employees, and to grant shares to employees that immediately vest.
The U.S. Treasury Department said it voted its 7.7 billion shares, representing about 27 percent of the bank's shares, in favor of the director nominees, and in favor of shares for employees. The government also voted in favor of a proposal allowing the bank to do a reverse stock split.
Citigroup has no immediate plans to do a stock split, but just wants to have the flexibility, said Chairman Dick Parsons. Citigroup had that authorization last year, as well.
For most other proposals, Treasury voted in the same proportion as other shareholders, so it did not affect the outcome.
Pandit, acknowledged the U.S. government's $45 billion bailout in his prepared remarks, saying he was very thankful for the assistance of the U.S. taxpayers at the height of the financial crisis ...We wouldn't be here without their help.
Pandit repeated comments that Chief Financial Officer John Gerspach said on Monday regarding Goldman Sachs: that Citigroup is not involved in the Goldman Sachs case, but as previously announced is part of an industry-wide investigation into subprime mortgage matters. Pandit declined further specific comment about Goldman.
The U.S. Treasury acquired its shares in the bank through the Troubled Asset Relief Program over the course of three rescues in 2008 and 2009. The United States said in March that it plans to shed its Citigroup shares over time.
Treasury is a reluctant shareholder in private companies and intends to dispose of its TARP investments as quickly as practicable, the department said on Tuesday.
(Reporting by Dan Wilchins and Maria Aspan; editing by John Wallace, Leslie Gevirtz and Bernard Orr)