Citi loses Ajay Banga to MasterCard

Citi and MasterCard announced on Friday that Ajay Banga has resigned from his position as Asia-Pacific chief executive officer at the US bank to join MasterCard as president and chief operating officer.

Banga will join the credit card provider on August 31, reporting to Robert Selander who is currently president and CEO. Selander will relinquish the president title to Banga, while retaining his role as CEO. Together with the terms Banga has negotiated, this suggests the Citibanker has been hired to eventually take on the head honcho's job at MasterCard.

In the Citi statement, CEO Vikram Pandit referred to the "significant contributions [Banga] has made to building the great global franchise that Citi is today". Banga had occupied the newly created position as Asia-Pacific CEO since 2008, which made him responsible for all of Citi's business lines in the region, including credit cards and consumer banking, institutional banking, wealth management and alternative investments.

"The growth and success of our Asia-Pacific business is key to the future of our global franchise, and we will continue to invest in this very important part of the world," Pandit said in an internal memo to Citi employees announcing Banga's departure. Indeed, Banga took up the position last year amid announcements that he would further streamline a region which is integral to Citi's future and competitive advantage.

In its New York Stock Exchange filing announcing Banga's resignation, Citi said a successor will be named shortly. Speculation is rife about who that may be, with some sources suggesting that, like Banga, the new CEO will come from outside the region. Citi has remained profitable in Asia during the financial market downturn, but a more difficult operating environment is taking its toll. First quarter 2009 revenues of $3.8 billion in the region were down from $4.6 billion in the first quarter of 2008 and specific countries like Japan and India are facing pressure. So, the new CEO inherits a region with great promise, but also with challenges.

The MasterCard job will see Banga relocate back to the US from Hong Kong, where he has been based since he took up the Asia-Pacific CEO role. But some sources comment that his family had not yet moved to join him in Hong Kong, making the move relatively simple.

At MasterCard Banga will oversee key business operations, including customer relationships, products, services, marketing, technology and operations. The credit card firm has poached someone with extensive international experience, across markets and companies.

Banga joined Citi in 1996 as head of marketing and sales in India. Since then, he has held positions such as head of sales, marketing and business development for Europe, Middle East and Africa, based in Brussels; and division executive for the consumer bank in Central and Eastern Europe, Middle East and Africa, based in London. In 2000, Banga was appointed business head for CitiFinancial and US consumer assets, and in 2002 he was promoted to executive vice-president for the global consumer group and president of retail banking in North America.

Before moving to Hong Kong to take up his current job in 2008, Banga spent three years as chairman and CEO of Citi's global consumer group, which includes credit card and consumer banking operations outside North America.

"I thought, deliberated and frankly, agonised, over this decision for quite a while but finally concluded that this was the right time and opportunity for me to move on," Banga said in the internal memo to Citi employees. "I remain convinced that Asia-Pacific's economies will be the stars in driving global economic growth in the years to come."

Before he joined Citi, Banga spent 13 years with Nestle India and two years with PepsiCo.

Banga joins MasterCard at a base salary of $800,000 plus annual bonus. His target bonus payout will be 150% of his base salary, in other words $1.2 million, and his 2009 bonus will not be prorated.

The 49-year old Indian who graduated from a leading Indian business school -- the Indian Institute of Management at Ahmedabad -- has also negotiated a $4.2 million sign-on bonus. The sign-on will be paid in two equal instalments, with $2.1 million payable within 30 days of Banga starting at MasterCard and the second instalment in 2010, within 13 months of his joining date.

In 2009 Banga will also receive $4.9 million in restricted stock units that vest as follows: 20% 12 months after the grant date; 20% 24 months after the grant date; and the balance 60% 36 months after the grant date.

He is being granted stock options valued at $2.4 million, which vest as follows: the first one-third six months after the grant date; the second one-third 18 months after the grant date; and the final one-third 30 months after the grant date. Banga will also receive a 2010 standard award under the stock plan, valued at $4.4 million, expected to be equally split between non-qualified stock options and performance stock units.

If Banga leaves MasterCard because he is not offered the CEO's job by June 30, 2010 (with his term to start no later than January 1, 2011) he will still receive the second $2.1 million instalment of his sign-on bonus. This clause of Banga's employment contract, coupled with the fact that he has been able to negotiate a non-compete that permits him to move to a competitor if he does not get the CEO's job by said date, indicates the succession plan at MasterCard has been quite clearly agreed.

"I am proud to have worked with terrific colleagues around the world who have been tireless in their efforts to achieve the aspirations of their clients," Banga said in Citi's NYSE filing on Friday. "These people are one of the many great reasons to be confident in Citi's future and in the unmatched opportunity that's being created every day."

However, some sources say that uncertainty regarding Citi's future, coupled with restrictions on pay imposed by Citi's continued participation in the US Treasury's Troubled Asset Relief Program (Tarp), is causing an exodus of talent from Citi and the very people Banga is referring to are actively seeking opportunities to parachute out.

"Folks who stay at Citi have to be prepared to be in it for the long-haul," said a specialist. "Turning around the beleaguered institution is not going to be easy."

But bankers, who unanimously refer to Banga as "very personable", suggest that the new job represents an unbeatable opportunity for the veteran Citibanker.

Banga is leaving for the chance to occupy the top position at a global institution, an opportunity he may not have at Citi, said one source, adding that the MasterCard job plays to Banga's strengths and background in the consumer market. It is also generally agreed that MasterCard's gain is a large loss for Citi and Banga's shoes will be hard to fill.