(Reuters) - Manuel Medina-Mora, who helped build up Citigroup Inc’s (C.N) Mexico business only to see it run into trouble after he stopped managing it day-to-day, will retire in June, the bank said on Friday.
Medina-Mora, who heads global consumer banking at Citigroup, was expected to retire before his 65th birthday in August, people familiar with the matter said. But the bank did not name a successor for Medina-Mora, which implies that Citigroup had not spent years planning for the move, analysts said.
The bank separately announced that its board had cut pay for Chief Executive Michael Corbat by 10 percent.
Taken together, the two moves suggest that Citigroup’s board is pressing management to perform better after the bank posted a 49 percent decline in profits last year and failed a key regulatory test, analysts said.
“Michael O’Neill is the chairman of the board there, and he is absolutely on the scene, keeping the pressure on,” said Mike Mayo, an equity research analyst at CLSA in New York.
Medina-Mora spent most of his decades-long banking career in Mexico, and was known as “Mr. Mexico” in Citigroup. He joined Banamex in 1971 and was CEO of the franchise when Citigroup bought it in 2001. He was promoted to head its Latin American region in 2004 and to lead Citigroup’s global consumer banking business in 2010, remaining as Banamex chairman.
After the financial crisis, some executives inside the bank saw Medina-Mora as a possible future chief executive. But his ties to Banamex became a liability in recent years, after the bank’s Mexican unit had problems ranging from bad loans from apparent fraud to a 2013 trading scandal.
Banamex’s business in the United States is also facing a U.S. criminal investigation involving possible violations of money-laundering laws, according to company disclosures. The bank last year cited “control issue” in Banamex USA as at least one reason for its cutting Medina-Mora’s annual compensation for 2013 to $9.5 million from $11 million.
Mark Costiglio, a spokesman for Citigroup, declined to comment on the timing of Medina-Mora’s departure.
In a bank memo to its employees, Citigroup CEO Corbat credited Medina-Mora with turning a scattershot global consumer operation into a unified, cohesive business. He said he will name a replacement soon.
During Medina-Mora’s tenure as head of global consumer banking, the unit’s income from continuing operations rose 49 percent to $6.9 billion from $4.7 billion.
The figures exclude income or losses from businesses the bank is looking to shed, housed in a unit called “Citi Holdings.” That unit may be a step closer to selling another asset: Citigroup is in advanced talks to sell consumer finance business OneMain Financial Holdings to subprime lender Springleaf Holdings Inc, (LEAF.N) sources told Reuters on Friday.
In a separate securities filing on Friday, Citigroup said that Corbat’s pay had been cut by about 10 percent in 2014 to $13.1 million. The median U.S. annual household income is just above $50,000. Since last year, Citigroup has failed a crucial regulatory stress test needed to raise its dividend and had to deal with the loans scandal and other issues at Banamex. The bank also paid out billions in legal settlements, which cut into its earnings. Citigroup nearly failed during the financial crisis, forcing it to accept three U.S. government rescues, and has been turning itself around since then.
In a separate memo announcing his retirement, Medina-Mora said he made the decision “after careful consideration and with deep emotion.” He will keep a non-executive chairman role at Banamex even after his retirement on June 1, according to the bank memorandum.
Citigroup fired 11 employees linked to the fraudulent loans to oil services company Oceanografia, a supplier to Pemex, and later replaced Banamex’s CEO.
Citigroup directors held flat Medina-Mora’s compensation for 2014 at about $9.5 million, the same as for 2013, according to filings by the company.
(Corrects to say Medina-Mora’s pay is the same for 2014 as 2013, not higher, in last paragraph)
Additional reporting by Anil D'Silva and Amrutha Gayathri in Bengaluru; Writing by Lauren Tara LaCapra in New York; Editing by Dan Wilchins, Grant McCool, Paul Simao and Andrew Hay