By most accounts, Michael Corbat is smart, reasonable and tough, a banking veteran who worked his way up from the trading floor to the executive suite of Citigroup Inc.
For his next act, he has to accomplish something far more difficult: turning the banking giant into something less unwieldy and more profitable that investors will love and regulators won't reprimand.
Mr. Corbat, 52, took over as chief executive officer three months ago after the board ejected his predecessor, Vikram Pandit. On Thursday, he will face investors and analysts in his first quarterly earnings announcement.
The scrutiny will be intense. Investors are watching to see whether Mr. Corbat will accelerate his early steps to streamline Citigroup's global businesses and reduce expenses.
More broadly, they want to know whether Mr. Corbat intends to take an incremental or dramatic approach to refashioning the bank, which nearly sank in the financial crisis and has lagged its peers ever since.
"It could be that Citi finally is trying to rectify a decade of mishaps and poor performance," Michael Mayo, a banking analyst at Credit Agricole Securities, wrote in a report earlier this month. "Now we have to wait and see if Citigroup is serious" about a major overhaul of its business.
Judging by Citigroup's stock price, Mr. Corbat is headed in the right direction. Shares have risen 16 per cent since he took over from Mr. Pandit in October, a jump that has outperformed a broader index of banking stocks' shares. The quarterly earnings report due Thursday is expected to show healthy year-over-year growth in profit.
Earlier this month, analysts at Goldman Sachs Group Inc. added Citigroup to their list of favourite North American stocks, calling the bank the "best large-cap restructuring story" in the sector.
But it's also clear deeper worries remain. Most importantly, Citigroup's stock continues to trade at a significant discount to its book value – a sign that investors consider the bank as a whole less valuable than the sum of its parts.
With roots stretching back 200 years, Citi became a global powerhouse and then a financial "supermarket" under the leadership of Sanford I. Weill, who proudly helped to destroy what remained of the wall between commercial and investment banking. (He also had a shocking change of heart last year, calling for big banks to be broken up.)
So far Mr. Corbat hasn't shown any inclination toward drastic change. But he has moved quickly to make his mark on the sprawling bank, which operates in more than 160 countries and has 260,000 employees.
Mr. Corbat streamlined the executive ranks and pushed some of Mr. Pandit's loyalists toward the exits. In December, he announced a plan to shed 11,000 jobs, close 80-odd branches, and exit or scale back operations in countries such as Pakistan and Paraguay. Those moves are expected to save the bank $900-million (U.S.) in 2013.
In response to a query about the bank's plans to streamline its businesses, a Citigroup spokesperson declined to comment beyond what was revealed in the December announcement. At the time, Mr. Corbat said in a statement that the bank remains committed to its "unparalleled global network" but had identified areas and products "where our scale does not provide for meaningful returns."
Mr. Corbat has also pledged to improve one of the sources of tension that led to Mr. Pandit's ouster: the bank's relationship with regulators. Citigroup had until Jan. 7 to submit data for a new round of bank stress tests conducted by the U.S. Federal Reserve Board. Last year, the bank suffered a humiliating setback when regulators rejected its request for a share buyback.
Inside the bank, the mood is surprisingly upbeat, one Citigroup executive said, despite the recent turmoil at the top, the round of layoffs and a weak economic recovery: "We survived, we're doing well … [and] we have a guy in charge who knows the place very well."
For some investors, though, Mr. Corbat hasn't gone nearly far enough. In November, a group filed a shareholder proposal encouraging the bank's board to explore the outright sale of one or more of its businesses. The proposal, if approved by the U.S. Securities and Exchange Commission, could come up for a shareholder vote at Citigroup's annual meeting in April.
Recent developments – a series of banking scandals, Mr. Pandit's hasty exit – "have only increased our concern that Citigroup is too big to manage," said Lisa Lindsley of the AFSCME Employees Pension Plan, a large pension fund for federal, state and municipal employees, which is one of the investors behind the shareholder proposal.
A Citigroup spokesperson declined to comment on such criticism, pointing instead to an earlier statement on the proposal. "Citi has sold more than 60 businesses and reduced assets in Citi Holdings by more than $600-billion since the credit crisis began," the bank said in the statement. Citi Holdings is a unit created in the financial crisis that houses businesses the bank intends to sell.