Citi activist calls to carve up group

Shareholder at Citigroup proposed two businesses, one in consumer lending, and the other in investment banking.

A notorious activist shareholder and Citigroup investor has suggested splitting the bank into two businesses, arguing the Group is ‘too big to manage’.

The proposal is to split the firm into two companies with one focusing on consumer lending, and the other on investment banking.

Bartlett Naylor, who is an expert on corporate governance and shareholder rights, and a shareholder in Citigroup, said in the proxy: “Many smaller banks have proven far better investments. Just as in the 2008 crash, shareholders will suffer in the next crash at Citi.”

Naylor explained the group is concerned a mega-bank like Citigroup may not be “too big to fail”, but instead “too big to manage”.

The suggestions are backed by events in 2008, when financial markets crashed and Citi’s stock fell from $544 to $50 between 2007 and 2009.

The stock has remained at 90% below pre-crash levels for six years. At the time of writing, Citi’s share price stood at $42.

A supporting statement explained that in accounting terms, the group is “worth more liquidated”, as the group’s assets less liabilities is $220 billion, and its stock market value is $162 million.

Naylor said splitting the firm will “reduce the risk of another financial meltdown that harms depositors, shareholders and tax payers alike…“

Last year, Naylor suggested similar action be taken at Bank of America, but his proposals were defeated with only 4% vote from the bank’s shareholders.

The notion of splitting up banks into smaller businesses has hit headlines recently, as senator Bernie Sanders has supported the idea in his campaign for the Democratic presidential nomination.