Citi appoints new chief risk officer

Citigroup has announced the appointment of Brian Leach as the firm's new chief risk officer (CRO), just three months after the bank appointed Citi veteran Jorge Bermudez to the same position.

Leach, currently CRO and co-chief operating officer at Old Lane, the multi-strategy hedge fund acquired by Citi in April 2007, will also assume the title of acting risk officer for the institutional clients group. He will report directly to Citi chief executive Vikram Pandit, who headed Old Lane prior to the acquisition. Leach will be based in New York.

Leach has held a variety of risk management roles, and was part of the six-person oversight committee charged with unwinding the positions of Connecticut-based hedge fund Long-Term Capital Management in 1998 (Risk January 2000, pages 32-33).

He replaces Bermudez, who has only been in the CRO hot seat for 105 days. In a statement, Citi revealed that Bermudez had planned to retire in October 2007, but agreed to extend his 33-year stint at the bank until a more permanent appointment could be made. He will retire once Leach has fully settled into his new role.

Bermudez himself replaced Dave Bushnell as CRO. Bushnell decided to step down as CRO after 22 years at Citi in November 2007 following the $3.55 billion subprime-related third-quarter writedown that also ended Chuck Prince's tenure as chief executive. That loss was itself subsequently eclipsed by the $18.1 billion mark-down the bank recorded in the last quarter of 2007.

In addition to Leach, four other senior managers have been appointed to Citi's risk structure as part of a wider reorganisation. Suneel Bakhsi, currently head of global commercial banking at Citi Markets and Banking, will become CRO of the global consumer group for Citibank North America.

Charles Monet, currently serving as an adviser to the co-chairmen of the Basel sub-committee defining regulatory capital for Citi's trading book, will assume responsibility for risk oversight of capital allocation.

Greg Hawkins will head risk oversight of real estate and mortgage exposure, having joined Citi from Connecticut-based Caxton Associates, where he was a senior portfolio manager for Caxton Relative Value Holdings.

Finally, Adil Nathani, currently a member of Old Lane's fixed-income team, will assume responsibility for risk oversight of structured credit. All four will report directly to Leach and be based in New York.

OTHER MOVES

David Gu has taken over as sole head of fixed income, currency and commodities in Europe, the Middle East and Africa (EMEA) at Merrill Lynch. The move comes after the resignation of co-head Dimitrios Psyllidis, who has left the firm for personal reasons.

Gu had been co-head with Psyllidis since August 2006, as well as global head of rates, currencies and electronic trading. He will report to Andrea Orcel, president of EMEA global markets and investment banking.

Psyllidis left the firm at the end of March, having joined in October 1996. As well as becoming co-head of fixed income, currency and commodities, he served as a member of the EMEA executive management committee and member of the Merrill Lynch UK board of directors.

Noreddine Sebti, Deutsche Bank's global head of equity trading, is to relocate to Hong Kong from New York to head the firm's equities business in Asia. He takes over from Colin Fan, who will move to London to become co-head of global credit trading.

In his new role, Sebti will report to Loh Boon-Chye, head of global markets Asia, and continue to report to Yassine Bouhara, global head of equities. Sebti will take over regional responsibility in Asia, managing the full range of the bank's customer-facing equity businesses, including cash equities, derivatives such as synthetic access to local markets, exotics and flow, and illiquid equity derivatives trading and financing. Sebti joined Deutsche Bank in 1998 and has held several senior roles in London and New York.

Credit Suisse has sacked or suspended the traders behind the mis-pricing that caused a $2.65 billion writedown last month. On March 20, the bank reported its internal review had found the write-down of asset-backed securities positions held by its collateralised debt obligation trading business was only $2.65 billion, less than the $2.85 billion it originally announced on February 19.

"The pricing errors were, in part, the result of intentional misconduct by a small number of traders. These employees have been terminated or suspended and are being disciplined under local employment law. The review also found that the controls put in place to prevent or detect this activity were not effective," the bank said.

Credit Suisse plans to overhaul control and risk management measures, and reorganise the CDO trading business. The losses will be spread across the fourth quarter of 2007 and the first quarter of 2008. The bank now expects to make a loss in the first quarter. The news implies, as chief risk officer Wilson Ervin suggested last month, that the mis-pricing had been going on for several months before it was detected in mid-February (Risk March 2008, page 8).

Societe Generale (SG) has named Frederic Oudea as its deputy chief executive, joining two others. Oudea will remain chief financial officer, and joins the other deputy chief executives, Philippe Citerne and Didier Alix. He joined SG in 1995 and became chief financial officer in 2003.

Stefan Krause has been named as the next chief financial officer of Deutsche Bank. He will succeed Anthony di Iorio when di Iorio retires on October 1, and will also join the management board of Deutsche Bank on April 1.

Most recently, Krause was a member of the management board of German automobile maker BMW, where he also served as chief financial officer from May 2002 until September 2007.

Clive Briault, the UK Financial Services Authority's head of retail supervision, will leave the FSA at the end of this month. He will be replaced in the interim by chief operating officer David Kenmir. Kenmir, in turn, will be temporarily replaced by the FSA's human resources director, Kathleen Reeves.

FSA chief executive Hector Sants says the regulator will also step up its supervision of financial stability and large retail groups in the wake of the Northern Rock crisis. David Strachan, previously director of large retail groups, will move to head of financial stability, working in the chief executive's office with the head of wholesale supervision, Thomas Huertas. Clive Adamson will succeed him as acting head of large retail group supervision.

Standard Chartered has made senior appointments in Manila and Singapore in commodities, foreign exchange and interest rates. Michael Bass took over as global head of commodities at Standard Chartered in Singapore in December to drive the bank's expansion in this area. He was previously global head of interest rates and foreign exchange, and has been succeeded by Nitin Gulabani, the global head of rates in Singapore, and London-based global head of foreign exchange Richard Leighton.

The commodities business was previously co-headed by Sean Mulhearn, global head of commodity derivatives origination and structuring, and Jeremy East, global head of commodity derivatives trading. Mulhearn and East remain in those positions in Singapore, reporting to Bass, who in turn reports to Leonard Feder, group head of financial markets in Singapore.

Meanwhile, Rey Donald Ching-Uy relocated from Manila to Singapore on February 11 as director of interest rate derivatives trading for southeast Asia. In this newly created role, he reports to Pao Chatakanonta, regional head of interest rate derivatives for southeast Asia.

Ching-Uy was previously head of rates and foreign exchange trading for the Philippines and his old role has been split into two. Juan Martin Imperial, formerly a foreign exchange spot dealer, is promoted to head forex trading, while John Christopher Lu has been hired to trade interest rate derivatives.

Henry Ritchotte has been promoted to chief operating officer (COO) of Deutsche Bank's global markets division. He will replace Mark Ferron, who will retire in early 2009. During 2008, Ritchotte and Ferron will act as joint COOs to ensure a smooth transition of the role. Ritchotte, who joined Deutsche Bank in 1995, will also retain his current responsibilities as head of global markets in Japan until a successor is appointed. He will relocate from Tokyo to London for his new position.

John Marshall, the vice-chairman of the International Securities Exchange (ISE) in New York, has resigned after being charged with insider trading. Marshall and two others, Alan Tucker and Mark Larson, were partners in Marshall Tucker, a financial consultancy. According to the US Securities and Exchange Commission, which has charged the three with insider trading, Marshall passed confidential information to Tucker and Larson during the merger talks between ISE and Eurex last year. It claims Tucker and Larson traded on the information and made $1.1 million and $31,000 respectively from buying ISE stock and call options.

The three men have also been charged with conspiracy to commit securities fraud by the US attorney for New York's southern district.

Eurex announced its $2.8 billion ISE merger in April 2007. The deal closed in December that year. The SEC claims the insider trading took place from December 2006 onwards, almost as soon as takeover talks began.

Terence Noe has relocated from UBS in London to Singapore in the newly created post of Asia-Pacific head of exchange-traded commodity derivatives. Noe was previously global head of sales for exchange-traded commodity derivatives. He now covers both sales and execution for the Asia-Pacific region.

His role in London is split on a regional basis, with Europe covered from London, the Americas from Chicago and New York, and Asia-Pacific from Singapore. Noe reports to Tim Woodward, London-based global head of exchange-traded commodity derivatives.

Alf Salti will leave his position as Asia head of energy trading at JP Morgan in Singapore in April to move to London as global head of fuel oil trading.

Ouyang Xiuzhang will replace Salti, joining from Goldman Sachs, where he has held several positions trading distillates and crude oil over the past 10 years. Xiuzhang's experience covers physical and derivatives trading, including vanilla and exotic options. Both Salti and Xiuzhang report to Brian Cumming, London-based global head of oil trading at JP Morgan.

Electronic brokerage E*Trade has appointed Donald Layton as its new chief executive. Layton was elected chairman of E*Trade's board in November 2007, at the same time Jarrett Lilien was named acting chief executive. Lilien steps down from this position to resume his previous role as president and chief operating officer.

E*Trade's management shake-up follows the firm's announcement in January that it had made a net loss of $1.4 billion in 2007, and suffered asset losses and impairments of $2.45 billion - which included the sale of its entire asset-backed securities portfolio to Citadel Investment Group for $800 million.

Layton had retired in 2004 after spending 29 years working at JP Morgan and its predecessors, serving most recently as vice-chairman. He worked as an adviser to E*Trade before taking the position as its chairman last November.

Michael Klein and John Havens have jointly taken Citi chief executive Vikram Pandit's former role as chairman and chief executive of the bank's institutional clients group in New York.

Havens will be chief executive of the institutional clients group, while Klein will serve as chairman. Havens will have responsibility for day-to-day management and strategic oversight, with heads of sales and trading, investment banking, alternative investment banking, and corporate and commercial banking all reporting directly to him. He has also been named chairman of Citi Alternative Investments. Klein, meanwhile, will focus on relationship-building outside the bank.

Citi's institutional clients group combines the functions of its markets and banking division, as well as its alternative investment arm. The two were run as separate businesses until October last year, when they were brought together under Pandit.

Klein most recently served as chairman and co-chief executive of the bank's markets and banking section. Havens was formerly chief executive of Citi Alternative Investments, having joined the firm alongside Pandit in April 2007 from hedge fund Old Lane. Both Klein and Havens will report to Pandit.

Credit Suisse has appointed Gael de Boissard and Simon Yates as co-heads for global securities in the Europe, Middle East and Africa (EMEA) region, effective immediately.

De Boissard and Yates will report to Mike Ryan globally and to Eric Varvel on a regional basis. They will both sit on the bank's EMEA operating committee and the global securities operating committee.

In these newly created roles, De Boissard and Yates will oversee all aspects of sales, structuring, trading and research across equities and fixed income. As a result of the appointments, product and country heads in the EMEA region will report to them, in addition to their existing global product reporting lines.

As well as their regional responsibilities, De Boissard will continue to lead the global rates and foreign exchange business, while Yates will remain head of global equity derivatives. Yates will continue to have a direct reporting line to Tony Ehinger, head of equities, and will remain a member of the global equities management committee.

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