Citigroup reaches out to combative analyst Mike Mayo before shareholder meeting

April 23, 2013, 10:13 AM

Bloomberg, Citigroup

CLSA analyst Mike Mayo, Citigroup CEO Michael Corbat

Mike Mayo, analyst at CLSA, known on Wall Street for his brash style and pointed questions to CEOs, has had a contentious relationship with Citigroup over the last few year. Now that may all be changing.

Citigroup Inc. has reached out to Mayo to meet with Chief Executive Mike Corbat, the analyst told MarketWatch.

“The communication has been pretty continuous over the last few months,” said Mayo. “It’s been a process of engagement and listening more.”

In fact, it’s got so friendly that Mike was scheduled to meet with CEO Corbat on Monday this week two days before the firm’s shareholder meeting in New York. . But unfortunately, it was Mayo that had to decline the meeting, as he couldn’t cancel on another meeting with another major firm’s chief financial officer. Mayo has bought shares of Citigroup so he could participate in that meeting and ask the firm’s leadership questions.

“It’s gone from cold war to détente to engagement,” said Mayo, on the recent warming of relations with the firm.

Citigroup insiders say that Mayo follows that company and that they are doing the right thing and reaching out to him.

Mayo has been a critic of the company for 10 years, and has fought with Citi to meet with former CEO Vikram Pandit, complaining to media outlets that all his competitors got meetings with Pandit and the key people there and he didn’t. Mayo also criticized Pandit’s co-chairing the World Economic Summit in Davos in 2012 saying: “What kind of signal does that send that the bank that was the worst-performing in our country over the last decade and whose stock price is still down significantly since he took over is the ambassador for our financial industry.”

Citigroup confirms a meeting was scheduled.
Mayo currently has a buy recommendation on Citigroup stock.

Citigroup’s shareholder meeting on Wednesday will be the first after Mike Corbat took over from ousted Chief Executive Vikram Pandit, that some have called abrupt and a “black-eye” for the firm. Citi Chairman Michael O’Neill and other board members will have an opportunity to talk publicly about the firm’s progress directly to shareholders. There are seven proposals for the meeting to be discussed.

The firm reported first-quarter net income was up 30% to $3.8 billion and beat analyst estimates handily and released loan reserves, a move analysts say signals the bank is more confident in the economy. The firm is still struggling for growth and cutting back expenses, say analysts.

Mayo says the firm reaching out to him is a microcosm of Citi’s more shareholder friendly attitude today versus previous CEOs, but is still pushing the firm to look at how it could break off units.

“How does the board measure and report success to shareholders, and how is that review applied to its review of strategic alternatives, such as splitting the company?” said Mayo in a recent research report.

Mayo says looking at breaking up Citi would be the 8^th proposal on the list if he could add it.

- Sital S. Patel

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