(New throughout, adds McQuade's new job title, updates share
NEW YORK, April 3 Citigroup Inc said on
Thursday that Gene McQuade, a senior executive who had planned
to retire, is instead remaining to lead the bank's efforts to
win permission from regulators to boost dividends and buy back
Last week, the Federal Reserve rejected the bank's request
to spend $6.4 billion buying back shares and boosting its
dividend. Bank executives are still reeling from
that move, which Chief Executive Officer Michael Corbat wrote in
a memo to employees "is a call to action for our firm."
McQuade had planned to retire as chief executive of Citibank
NA, a U.S. operating subsidiary, and be nominated to Citigroup's
board. Instead, McQuade will become vice chairman of Citigroup,
reporting to the CEO. Corbat cited the "importance of this
effort and the substantial time commitment required."
The Fed objected to Citigroup's request, saying the bank had
not sufficiently improved its risk management practices and
could not determine well enough how revenue and income would be
hurt under stressful scenarios around the world. It faulted the
bank's internal examination process.
The rejection is a blow for Corbat, who became CEO in
October 2012 when the bank's board grew frustrated with former
CEO Vikram Pandit. One source of frustration for board members,
in particular Chairman Michael O'Neill, was that the Federal
Reserve in March 2012 rejected Pandit's request to return more
capital to shareholders.
In 2013, under Corbat, the Fed approved Citigroup's plan to
buy back $1.2 billion of shares, and to keep the bank's dividend
at a penny a share. This year the bank had hoped to boost
buybacks and to lift its quarterly dividend to 5 cents a share.
McQuade will oversee the so-called CCAR application process
to the Fed for the next year, according to the memo. Citigroup
finance and risk executives will be accountable to McQuade on
steps toward the next application, Corbat said.
John Gerspach, Citigroup's chief financial officer, and
Brian Leach, head of franchise risk and strategy, had received
extra pay for 2013 partly because of their work seeking approval
of last year's plan, directors said in a proxy statement to
shareholders in early March.
Corbat said McQuade is now "fully empowered to do whatever
is necessary, and I will devote any resource required, to ensure
our next capital plan is not objected to."
Citigroup shares fell 1.2 percent on Thursday to $47.68.
(Reporting by David Henry in New York; Editing by David