Citigroup named three new outside directors Friday as the bank seeks to shift its focus back to traditional banking after it suffered a bruising hit from risky mortgage-backed securities.
The company installed four new independent board members earlier this year, but still faced criticism from shareholders that it was not enough change. Many felt the board did not have enough commercial banking experience.
Citi hopes that Friday's naming of former banking regulator Diana Taylor, Timothy Collins and Robert Joss — which bring the board's total to 17 — will be enough to satisfy critics. CEO Vikram Pandit, who has faced heavy scrutiny, is the only executive remaining on the expanded board.
Citigroup Chairman Richard Parsons said in a statement that the new directors "each brings deep and valuable experience in various dimensions of financial services."
"Citigroup's board has been a part of the bank's failed strategy for a long time," said Sydney Finkelstein, a professor at Dartmouth College's Tuck School of Business. "The government has been exerting the same sort of pressure at General Motors and Bank of America. It appears to be doing a better job at corporate governance than the bank did its own."
Finkelsteinsaid the new directors "will not be beholden to Pandit and Parsons, and I expect them to take a much more critical, and even realistic, view of Citigroup's future, and Pandit's role in it."
Citigroup also said Jerry Grundhofer, who joined its board in April, will become nonexecutive chairman of Citibank NA, its retail banking unit. He will work with Eugene McQuade, the unit's new chief executive. William Rhodes, who had held both titles, said earlier this month that he would step down.
Many analysts consider Grundhofer, a former chief executive of U.S. Bancorp, a candidate to run all of Citigroup should Pandit step down or be removed.
Citigroup, the third-largest U.S. bank by assets, has been one of the most troubled banks throughout the financial crisis. Its board and management have faced sharp criticism for allowing the bank to make big, risky investments in the housing market — actions that led to Citigroup reporting billions in losses. It has received $45 billion in taxpayer aid since last fall.
Earlier this month Citigroup made yet another top management shuffle, naming its third chief financial officer of the year and bringing in a new head of its Citibank division.
Taylor, 54, former Superintendent of Banks for the New York State Banking Department, is a managing director of fund manager Wolfensohn Capital Partners.She is a companion of New York Mayor Michael Bloomberg, has also worked at companies including KeySpan Energy and Smith Barney. Collins, 52, serves as CEO of investment firm Ripplewood Holdings and Joss, 68, is dean of Stanford University's Graduate School of Business. Joss previously served as CEO of Westpac Banking Corp.