Why Chuck Prince Should Embrace His Unexciting Side

No one, with the possible exception of Sandy Weill, has ever been particularly impressed with Chuck Prince. But Citigroup's CEO has always seemed at least to be a feet-on-the-ground kind of guy, a safe pair of hands for when the bank is going through regulatory storms.

Now, however, Citigroup is being buffetted by a different type of storm altogether – one which it, of all banks, should be able to easily weather. Citi is so big, and so international, that a subprime meltdown in the US will barely scratch it, and even a much wider US-based credit contraction shouldn't be too much of a problem. With enormous overseas revenues soaring in dollar terms as the greenback weakens, Citi would seem to be something of a safe harbor in this particular storm.

Except, it isn't. Citi's shares fell from $55 to $45 in the space of the past two months, and it's trading on a forward p/e ratio in single digits. If there has been a flight to quality, then Citi clearly isn't perceived as a quality stock or any kind of safe haven.

Which brings me to Prince's interview today with the NYT's Eric Dash:

Across Citigroup, Mr. Prince said, executives were pruning the portfolios of its core businesses in order to improve overall returns. There are no plans to sell or spin them off.
“This is about being smarter, getting things on and off the balance sheet faster,” he said, “and the velocity of assets — as opposed to changing the configuration.”

The velocity of assets? That is not the kind of language that investors want to hear in this kind of environment. Citigroup is not, and should not aspire to be, Goldman Sachs. (Which, by the way, is trading on an even lower p/e ratio than Citigroup is.) Citi is a bank – the biggest bank in the world, by some measures – and should behave as such, not as a heavily-regulated prop desk. Prince should really stop talking about "getting things on and off the balance sheet faster," and start talking about the way in which banks will have a much more important role to play in the global economy if and when the fast money goes away. But it seems that Prince has ambitions of being the fast money himself. And if there's one thing that Citigroup isn't, it's fast.