U.S. regulators have forced Citigroup Inc. (C) to hire external consultants who will analyze whether the company’s current management has the caliber to lead it out of the ongoing financial crisis.
 
Citigroup has entered an agreement with the Federal Deposit Insurance Corp. (FDIC) that requires increased scrutiny of the bank and also requires it to fix financial, managerial and governance issues. Recruitment firm Egon Zehnder has been retained by Citigroup to carry out a comprehensive, in-depth management review as requested by the U.S. government following the stress tests conducted in May 2009.
 
Citigroup is required to submit a plan of action about possible managerial changes to its board and regulators by the time it reports its third quarter results in October 2009.
 
The move will create intensified pressure on the management and comes as a threat to the long-term future of Citigroup top executives and board members including CEO Vikram Pandit, who is already faced with criticism from the FDIC. Citigroup has received about $45 billion in government aid to sustain the financial crisis.
 
Citigroup has added eight new directors and replaced its finance chief in recent months.
 
Bank of America (BAC) is another bank carrying out an internal review. It is one of the few banks that were asked by the regulators following the stress tests to review their management’s expertise and ability to manage the risks emanating from the current economic environment.
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