The biggest struggle yet for Citi's repairman

When Citigroup Inc's board of directors was looking for a chief executive in 2007, it called Michael O'Neill, who had turned around Bank of Hawaii Corp a few years before.
O'Neill spoke to a Citigroup board member on the telephone, but the board was reluctant to consider O'Neill seriously because he had never run a bank of Citigroup's size or complexity, according to a person familiar with the situation.
Five years later, O'Neill, 66, is effectively running Citigroup, which is more than 130 times bigger than Bank of Hawaii was last decade, as measured by assets. He joined the Citigroup board in 2009, became chairman this year and has played an increasingly powerful role, as most vividly shown by his ousting of Vikram Pandit as chief executive in October, after months of tension.
O'Neill, who hand-picked new CEO Michael Corbat, has an uphill task ahead of him. Citigroup is groaning under $171 billion of assets it wants to shed, has high expenses, and its profitability lags behind that of such competitors as JPMorgan Chase & Co.
And O'Neill faces the same question that kept him from being a contender for the Citigroup CEO spot: while he can fix a smaller bank, can he revamp a behemoth as complicated as Citigroup?
"It is an awfully complex situation," said current Bank of Hawaii CEO Peter Ho, who worked for O'Neill. "He relishes simplicity."
O'Neill, who declined to comment for this story through a spokesman, has provided some clues about his plan to turn the bank around. On a conference call with investors the day that Pandit stepped down, he said that he will follow his typical playbook.
A dozen people who have worked with O'Neill over the years say that plan usually involves the ruthless pruning of underperforming operations and deciding which ones are worth additional investment.
As he evaluates a bank, he delves deeply into details to look for value or risk that others may have missed. His decisions may differ from those of competitors, but he has a strong track record of being right, these people said. For example, when he was at BankAmerica in 1998, he exited a type of mortgage lending that brought heartburn to competitors a few years later.
Given Corbat spent three years after the financial crisis helping to dispose of Citigroup's bad assets, he may be a perfect chief executive - and ally - for O'Neill.