Krawcheck's exit stuns wealth industry
News of Sallie Krawcheck's imminent departure as head of Citigroup's global wealth management division has been greeted with stunned disbelief in the industry, drawing questions over the timing of the move given the bank's pledge to win clients from less well-capitalised banks.
Krawcheck, one of the most powerful women on Wall Street, will remain as chairman of wealth until the end of the year, at which point she intends to seek other opportunities. It follows a reorganisation at Citigroup which will realign its wealth division with its institutional clients group.
Her departure is understood to have followed disagreements with current Citigroup chief executive Vikram Pandit. She is understood to have been sceptical over aspects of his reorganisation and not keen on Citigroup products being aggressively marketed to clients.
She also voiced the suggestion that Citigroup clients should be compensated for losses on hedge funds and other products the bank had sold to them, people familiar with the matter told The Wall Street Journal.
One wealth adviser said: "Obviously I have no idea whether she made that suggestion or not. But if she did, her proposal would have opened the floodgate for compensation claims. It was not a proposal which Pandit could have entertained." A Citigroup spokeswoman declined to comment.
Her departure could interfere with an initiative by Citigroup to poach clients from the wealth divisions of less well-capitalised investment banks. Despite being hit in the early stages of the credit crisis, Citigroup, led by chief executive Vikram Pandit, is in a relatively strong financial position, as a manager of deposits by individuals worth $800bn (€543bn), of which $600bn are outside the US.
Krawcheck made her name as head of independent broking firm Sanford C. Bernstein. Her reputation for probity persuaded former Citigroup chief executive Sandy Weill to make her head of Citigroup stock research in 2002, at a time when it had been tainted by controversy relating to biased research. She later became chief financial officer and moved across to lead wealth management early last year.
Pandit said: "Sallie Krawcheck has been an invaluable asset to the firm and a true thought leader within the industry. She has an impeccable reputation and has represented City well with our top clients and key constituency around the world."
Her successor Mike Corbat, who has an investment banking background, was most recently global head of Citigroup's corporate and commercial bank. He will report to John Havens, chief executive of the institutional client group along with Ned Kelly, who steps up to become head of global banking.
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