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U.S. wants Citigroup management review

Report: Federal officials are pressuring Citigroup to hire external consultants who will evaluate whether the bank's current management is capable of leading it out of financial crisis.
/ Source: The Associated Press

A report Thursday says federal officials are pressuring Citigroup Inc. to hire external consultants who will evaluate whether the bank's current management is capable of leading it out of financial crisis.

The story in the Financial Times said recruitment firm Egon Zehnder has been retained by New York-based Citigroup to carry out a comprehensive management review that was requested by the U.S. government after its stress tests on banks in May. The report cited people close to the situation.

A spokesman from Citigroup was not immediately available to comment.

Citigroup has been undergoing major management changes in recent months, adding new directors and replacing its finance chief.

The bank is among the biggest recipients of government support amid the economic downturn. Since October, Citigroup has received $45 billion in government funds as part of the Treasury Department's $700 billion financial rescue package. A portion of that money was recently converted into a 34 percent ownership stake for the government.

In May, after completing its stress test of the bank and 18 other financial companies, the government said Citigroup needed to raise $5.5 billion. The tests were designed to determine how banks would fare if economic conditions worsened, and whether they might need additional capital.

The Financial Times said regulators, including the Federal Deposit Insurance Corp., is requesting the management review.

By the time it reports third-quarter results in October, Citi must present a plan of action about possible managerial changes to the board and regulators, the report said.