Citi and ValueAct originally signed the deal in January, after starting discussions in 2018 following investments in the bank. For more information, see www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi. NEW YORK (Reuters) – Citi Group C.N and hedge fund ValueAct Capital said on Thursday they would extend an existing information exchange agreement until the end of 2021 for a further two years. Mason Morfit, President and Chief Investment Officer of ValueAct, said: “During 2019, we have worked with Citi`s Board of Directors and management in the areas of strategy, financial planning and growth prospects. We were very impressed with Mike Corbat and the entire management team and we appreciate the collaboration we have developed. We are pleased to extend our contract for another two years until 2021, as Citi is still the Fund`s top seed, and we firmly believe it has long-term potential. The agreement allows ValueAct, one of Citigroup`s largest shareholders, to work with bank managers and directors on strategy, governance and planning issues, he said in a joint corporate communication. ValueAct Capital, one of the industry`s most closely watched activist hedge funds, got engaged for the first time at Citi in early 2018. At that time, ValueAct Capital acquired a stake in Citi, which is currently 1.3%. In January 2019, Citi and ValueAct entered into an information exchange and interaction agreement, valid until December 2019.
The parties confirmed the agreement for another two years. Following the January agreement, Citi made changes to its high-level management. She appointed Jane Fraser to head the consumer bank and its president. Apparently, this was a succession plan for CEO Mike Corbat. In addition, Citi veteran Mark Mason has been appointed CFO. Finally, Citi transferred responsibility for the institutional client group to Paco Ybarra. The agreement allows ValueAct “to have access to confidential company information and to work with members of Citi`s management team and board of directors in areas such as strategy, governance and operational planning.” ValueAct no longer has a seat on the board of Directors of Alliance Data Systems. This clears the way for a seat on Citi`s board of directors. However, according to FT, ValueAct does not see the need, given that the existing regime has worked very well.
Corbat, 60, held the high-level position for eight years and was able to streamline the company and stabilize profitability. Still, the bank`s share price under Corbat has lagged behind that of its big Wall Street rivals. Citi`s shares gained about 40% during his tenure, compared with 138% for JPMorgan and 171% for Bank of America. ValueAct Capital ValueAct Capital, based in San Francisco, California, implements a comprehensive investment strategy that combines intensive diligence, concentrated investment and active and constructive participation in the added value of these investments. ValueAct Capital is generally the largest or largest shareholder in each of its major portfolio investments and often serves on the board of directors of these companies, where it works with management and the board of directors to help companies achieve long-term sustainable results. Citigroup is the third largest U.S. bank by assets. It had to divest many assets and close businesses to recover losses incurred during the 2007-08 financial crisis. Fraser, currently CEO of Citi`s global consumer banking business, widely seen as Corbat`s likely successor, began his career at Goldman Sachs and joined mcKinsey before joining Citi in 2004.