‘For Once, I’m Going to Put Shareholders Last’: Retired Citigroup Chairman Michael O’Neill’s Covid-Crisis Advice

Michael O’Neill, former Chairman, Citigroup

Michael O’Neill knows a bit about crisis. He stepped into the role of non-executive chairman of Citigroup in 2012, one of the darkest times in the banks’ history. Citi had recently failed the Federal Reserve’s stress tests and it was still carrying billions of dollars of toxic assets on its balance sheet four years after suffering a near-death experience in the wake of the U.S. financial crisis. Profits were weak, and shareholders demanded action.

He did not disappoint. Drawing on his experience turning around Continental Illinois National Bank and Trust and Bank of Hawaii, he moved fast to get Citigroup back on track, eventually helping the firm reinforce its key banking lines, slim down operations and divest unwanted assets. It wasn’t all smooth sailing—the move to replace CEO Vikram Pandit with successor Michael Corbat, for instance, was made public prematurely, resulting in a turbulent changeover at the top.

Citigroup ultimately ended up doubling shareholder value during O’Neill’s tenure, and passed its stress tests for four years. After retiring from Citi’s board in January, 2019, he was named Corporate Board Member’s Director of the Year by a committee of his peer directors.

We recently asked him for his take on the current coronavirus crisis and what directors can do to help at this challenging time. His remarks have been edited for length and clarity.

‘For Once, I’m Going to Put Shareholders Last’

Since the financial crisis, banks have done a very good job of coming to grips with potential threats like terrorist attacks and natural disasters, etc. This crisis has some of the same scent, but it is really quite different. Frankly, in many ways this is more complicated, because situations like those, they tend to be isolated.

This is a pandemic. Knowing what to do in situations like this is tough, particularly given that business people don’t have expertise in this area. I’m not sure anybody does at this stage, but certainly, business leaders don’t. So step one would be to listen carefully to the guidance that professionals are giving you, obviously.

Then you have to focus on the different constituencies that are affected. And for once, I’m going to put shareholders last, because there’s not a hell of a lot one can do, in the short term, to deal with the panic [in the markets.]

So let’s deal with employees. Let’s deal with customers. And let’s deal with the fact that banks are critical to the maintenance of stability. If you look at Italy they’re keeping three things open: They’re keeping pharmacies open. They’re keeping grocery stores open. They’re keeping banks open. So, in the case of banks, it’s pretty important that you stay open, but also that you do so safeguarding, to the extent you can, the health of both your clients and your employees.

So, what do you do? Well it’s committee work, right, as usual. Audit works on the business side. What’s really going on here? Why is there little liquidity in the treasury markets, etc.? And then, the personnel committee has got a lot of work to do, to make sure that the management is doing the right thing to protect, to the extent possible, its employees and its clients. With the business resumption plan, the operating people need to be involved.

It’s a full-court press without a road map. There’s a hell of a lot of things to do, a lot for management to do, particularly, but also for the board.

Working with the CEO

A couple of things. One, they’re going to be incredibly busy, so you don’t want to dominate their time. On the other hand, you want to know, in some detail, what it is they’re up to. So I would have regular meetings to get progress reports—just staying on the case, making sure that the approach that’s being taken is something that the board is comfortable with. The management is obviously closer [to the situation] than the board is, but you get a sense for the competence of these people pretty quickly. And hopefully, you have someone in the job that you’ve got a lot of confidence in. But this is a really tough one.

Acting as a source of support would be the most important thing. People are going to get some things wrong, obviously, but, in a large context, I think the response will probably be as good as it can be.

And so, it’s more supportive than assessing, at this point. Inevitably you’re in an assessing mode. But there’s going to be a lot of work. A place like Citi operates in 100 countries. Not every situation is the same. It’s just an enormous amount of work to do. And, by the way, when the market drops 20%, there are financial implications as well. So it’s not like you can forget about business for a day or two. There are all sorts of things going on in the environment that you need to be aware of. So it’s more support, I think, than assessment—particularly if you get the right people in the jobs.

Final Thoughts

Be informed but not intrusive. Don’t get in the way, but make sure, at a high level, that you understand what it is that’s going on and that you’re kept aware of things in a timely way. And again, much of it is dependent on the C-suite to get you good information on a timely basis. I don’t think the boards can do much more than evaluate it at a pretty high level. Obviously, to the extent that boards have an ability to contact people in the government at a high level that’s useful. But I think your basic business resumption plan, those basics are the ones that you need to follow and it’s really management’s job.