| John Reed | ||||||
The member of the Citibank alumni club who most influenced the lives of all his colleagues is barely seen around business circles these days. John Reed of course kept himself to himself in the latter part of his career at the bank. And these days he is pretty reclusive. Colleagues say he is still haunted by the period in 1999 when, in the aftermath of Citi’s takeover by Travelers, he was eclipsed by his co-chairman, Sandy Weill.
Former colleagues say that Reed must take some of the blame for Citi’s surrender to the insurance company Travelers, and his personal loss of sovereignty. Shaukat Tareen, a former Citibank country manager in Pakistan, argues: “If there had been the Pei Chias and Rana Talwars there, it would have been very difficult for Travelers to take over the consumer side of Citi. But Weill came in and within six months he was in charge of the entire consumer side of Citigroup. So Citi had conceded more than half of their territory in the first place. Once Sandy had taken over the territory it was very easy for him to dislodge John Reed.”
Former colleagues say that Citibank’s most successful business builders, such as Rana Talwar, Pei-yuan Chia and Rick Braddock, were forced out by Reed because he was terrified of high-flyers who might threaten his position. Talwar expresses a common view: “As people started reaching the top and really succeeding, he just got rid of them. Ultimately that was one reason why he lost to Sandy Weill.
“Sandy had a bunch of loyal people who had worked for him and would die for him and kill for him. But when John looked around, there was nobody behind him because he hadn’t built up a group of people. I was incredibly loyal to him, but when it was time to leave, he didn’t listen, he didn’t care. We’re still very good personal friends, I play golf with him. He had this trait, a big ego. He thought that as long as you pay people well for doing a good job, what the hell. Then, if you wanted to go, he just said, ‘go’.”
Tareen is as critical as Talwar of Reed’s style. “Reed’s only character flaw was that he would not build a second tier, he would build and destroy, build and destroy.”
Colleagues speak of an extraordinary intellect and capacity for vision, but are also painfully aware of a man who lacked the capacity to handle personal relations with colleagues. “He is incredibly smart, very long term and strategic in his thinking, but not a great people person,” says one. Some saw him as merely detached, but others argue that he was cold. According to Dick Huber, who knew Reed way back when he was an intern working for Bank of Boston in Argentina: “John is a very cold fish. I always got along pretty well with him. He speaks very good Argentine Spanish and we both enjoyed insulting each other in this God-awful Spanish. But he is a loner type of guy.” A senior source inside the bank that Reed built would only say “people had mixed feelings about John Reed”.
Reed, now 62, joined the bank in 1965 when it was still called First National City Bank as an operations analyst and strategic planner. He made his name by revamping the company’s ossified operations department and soon attracted the patronage of Walter Wriston, the bank’s chairman. In 1969, he was appointed a senior vice-president, the youngest in the bank’s history.
In the 1970s he led the drive into consumer banking, investing heavily in the credit card business. There he led pioneering work on the technology of automated teller machines, with the help of Frank Newman, whom he recruited at the time, and who stayed with the bank two years. “These were the early days of putting terminals into merchant locations,” recalls Newman. “It was pioneering stuff that Citicorp was up to. It was a fascinating time. It was a bank that was prepared to experiment in areas that might lead to future success. John’s very smart. He clearly led these new business activities. He was always looking to the future. He was prepared not just to run the bank, but lead it into the future.”
Newman says he has remained in contact with Reed, but knows nothing about what he calls his “recent problems”.
Reed was one of three managers tipped to replace Wriston in the early 1980s, the other two being Tom Theobald and the lawyer Hans Angermueller, and in 1984 he got the job. Reed saw the bank through the 1990 crisis, when its exposure to developing country debt and US real estate nearly brought it down. The bank benefited from the cost-cutting that Reed introduced and pushed through in that period. When the economy turned up in the early and mid-1990s and strong US growth also helped to promote growth in the emerging markets, Citi reaped the benefits.
It is an irony that it had to be an outsider who inherited Reed’s legacy, rather than the many loyal colleagues he ditched on the way. For Dick Huber, that was a crying shame. “I would hate to see Walter Wriston’s face now. If ever there was a bank that should have been a consolidator rather than a consolidatee, it was Citi. But John got so frightened. They almost lost it in ’91. He became very risk averse.”
Talwar argues that the new Citi may be different to that created by Wriston and Reed but, over time, it may be a better bank. “Citibankers are sad because it was a fantastic institution which is being subsumed within the Travelers umbrella. With John and Wriston, the international side was the dominant piece of the bank, even though you made a lot of money in New York. Since then, it has become much more US-centric.
“A lot of people who left said we got out in good time. Sandy is a very smart guy, a much better person than John to run a bank. He’s building a hell of a financial powerhouse.”
