Citigroup Equity-Trading Head Derek Bandeen Plans to Leave

  • Departure follows hiring of Armando Diaz from Millennium
  • Bank also added Keijer, Andre from Goldman Sachs this year

Citigroup Inc. equities-trading chief Derek Bandeen will leave after almost eight years at the bank, where he struggled to increase revenue and improve its ranking among the world’s largest stock-trading firms.

Bandeen, 53, who joined the New York-based company in May 2008, will stay on while the bank looks for a successor, Paco Ybarra, head of markets and securities services, said Friday in a staff memo obtained by Bloomberg.

Citigroup has been shoring up its equities business, hiring Armando Diaz, the former head of execution services at hedge fund Millennium Partners, to run equities cash trading in March. The bank also added derivatives veterans Dirk Keijer and Quentin Andre from Goldman Sachs Group Inc. for senior sales roles in the stock-trading unit. Citigroup brought in $3.13 billion in revenue last year from equity trading, the most since 2010.

“Derek leaves the business in a strong financial condition and poised to grow into one of the core franchises of our markets and securities services business,” Ybarra wrote.

Bandeen didn’t immediately respond to messages seeking comment.

Possible Successors

Three current executives, including two hired within the last year -- Diaz and senior sales executive Murray Roos -- are possible successors, according to Oliver Rolfe, founder of Spartan Partnership, a London-based recruitment firm. Americas equities head Daniel Keegan also is a likely candidate, he said.

“Bandeen came in, calmed everything down, stripped everything away, and almost prepared the ground for the next step,” Rolfe said. “He’s done as much as he can do.”

There were hiccups along the way. Bandeen was hired in 2008 by then-Citigroup Chief Executive Officer and former Morgan Stanley colleague Vikram Pandit to build up the business months before the financial crisis erupted. Citigroup took the largest bailout of any U.S. lender and many clients left.

Inconsistent Results

In 2009, Bandeen hired senior executives, including Rachel Lord, Daniel Petherick and Stefanos Bitzakidis from Morgan Stanley. Bandeen, a Canadian who was an all-conference fencer at Duke University, spent more than two decades at Morgan Stanley before leaving as head of European equities in 2007.

Over the next several years, Citigroup’s equities business showed inconsistent results. Revenue surged to $1.42 billion in the last quarter of 2010, only to plunge three quarters later when proprietary-trading and equity-derivatives units under Bandeen incurred losses. Equities revenue declined by $1.3 billion in 2011, Chief Financial Officer John Gerspach said in January 2012. The bank shut the prop-trading desk.

In October 2012, the board ousted Pandit in favor of Mike Corbat, who soon announced plans to cut 11,000 people and take $1 billion in restructuring charges. Some of the costs were to fix the cash-equities business.

Staff Departures

Staff turnover followed in what was seen by many as a dismantling of Bandeen’s vision. In April 2013, Bandeen replaced Europe equities boss Ronan Connolly, followed four months later by Lord’s departure for asset-manager BlackRock Inc. The following year, Petherick and Bitzakidis left, along with Andy Thompson, then head of equities for Europe, the Middle East and Africa. Three traders, including global head of equities trading Michael Pringle, also exited.

The bank didn’t fill some of the roles, or replaced the departing executives in unorthodox ways. In September 2014, bond trader Tim Gately was named to run European equities. Some saw that as a sign that Citigroup, true to its Salomon Brothers heritage, would always be a bond shop.

“They have to make a decision,” Charles Peabody, an analyst at Portales Partners LLC, said Friday in an interview. "They’ve been trying to rebuild the franchise and it really hasn’t succeeded to the level that it needs to. Progress has been made, but they’re not earning their cost of capital in that business.”

The bank ranked eighth in equities trading last year among the largest global investment banks, up one spot from 2012.

‘Unrealistic Goal’

Citigroup has “consciously made the decision” to invest in the equities business, and make it more profitable, President Jamie Forese, 53, said last year at an investor conference. The bank also has targeted prime brokerage, which works closely with equities.

“We looked at it to see, is this something we should stay in, should we exit it, or what are we going to do about it?” Forese said. “We’re not going to set a silly, unrealistic goal of trying to be in the top three in 12 months.”

Last year, the bank started hiring again. Stephen Roti joined from Nomura Holdings Inc. to fill the role Lord vacated two years earlier. Adam Herrmann was hired from UBS Group AG to lead prime finance and John Lowrey was brought on as global head of cash electronic execution.

The additions suggest Bandeen may have been setting things up for his eventual departure, Rolfe said.

“There is a lot there to say this is succession planning,” he said. “You wouldn’t have hired Murray when you hired him, you wouldn’t have hired Diaz when you hired him.”

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