Citigroup launches risk reshuffle after mortgage meltdown

Citigroup reinforces its risk management with an executive committee and new risk officer

NEW YORK – Citigroup has appointed Jorge Bermudez as its new chief risk officer, effective immediately. The bank has also appointed a committee of executives drawn from across the organisation to redress risk management shortfalls, following an announcement warning of a possible $11 billion writedown.

The world’s biggest bank has already announced third-quarter writedowns of about $6.8 billion, and a further $11 billion would represent one-third of the bank’s annual profit.

Bermudez replaces former chief risk officer Dave Bushnell, who will officially retire on December 31 after 22 years with the firm – on the heels of the departure of Citigroup’s chief executive Charles Prince on November 4. Bermudez has been at Citigroup for 30 years, previously serving as chief executive officer of the company’s commercial business group in North America and Citibank Texas. He will be responsible for global operational risk and compliance in addition to market and credit risk, while Bushnell will continue to advise Citigroup as a consultant.

Bermudez has already appointed three members to the new risk advisory task force: Brian Leach, co-chief operating officer for hedge fund Old Lane; David Lipton, head of global country risk; and Hamid Biglari, head of the investment banking unit’s financial institutions group.