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Howard Winn

Citigroup has been born again, or at least so it seems to listen to Mike Mayo, CLSA's US banking research head. Mayo's been the bank's fiercest critic for the past five years.
Only last month at CLSA's Investor Forum he was saying that Citigroup's corporate governance was no better than "a five-and-dime store on Park Avenue" and that under CEO Vikram Pandit, Citigroup treated its shareholders as if "it was too big to care".
But with Pandit's sudden departure, a rosy future apparently now beckons. Mayo has changed his recommendation on the bank from underperform to outperform and has set a new 12-month target price of US$43, a rise pushing 20 per cent.
He sees better corporate governance under the new CEO, Michael Corbat, and says "we can think of no better chairman of Citi than Michael O'Neill" who took up the position in April this year. Mayo has high hopes for Citigroup's new three-year plan due out in March.
He thinks the new management will impress regulators and pave the way for the dividend increase that was rejected by the US Fed earlier this year.
So much for Citigroup, but what about Mayo? What's he going to do for fun without Citi to kick around?
	 
High rotation to low fees
The accounting profession is heading for a shake-up on the mainland. The China Accounting Blog tells us this stems from the decision to institute mandatory auditor rotation every five years for state-owned enterprises, which include China's Big Four banks, the mainland's biggest audit clients. The process was unwittingly started in 2010 by KPMG when it asked China Construction Bank for higher fees and was promptly fired for its cheek. The upshot was competitive bidding among the Big Four accounting firms, and an average decline of 22 per cent in fees.
Deloitte has not come out of the reshuffling particularly well in that it is now without a big bank and thought to have taken on extra auditors from Ernst & Young in the hope of securing Industrial and Commercial Bank of China, which was previously served by E&Y. That account went to KPMG, albeit for a 16 per cent decline in fees, at 134 million yuan (HK$165 million). PwC has done well in replacing Bank of China with Agricultural Bank of China, though it will earn 100 million yuan less in fees. PwC is also auditing China Construction Bank for the same fee as its predecessor, KPMG, but will lose that client in three years' time.
The China Accounting Blog editor Paul Gillis observes that figuring out these behemoths is a mammoth job, and doing it for less will result in lower auditing standards. He notes that BOC is practically the same size as Citigroup, but the US bank pays 433 million yuan for its auditing, almost three times as much as BOC.
	 
North Korean numbers game
There seems to be some confusion over the exact number of Chinese tourists that have visited North Korea in recent years and what's on offer when they get there.
A recent article in the online edition of China Daily quoted Hong Yin-chel, publicity chief for North Korea's tourism administration, as saying that the country offered various attractions, ranging from spectacular natural beauty to cultural and religious heritage. The head of the country' tourism office in Dandong, Liaoning province, said about 60,000 to 70,000 Chinese tourists visited the country last year. However, an article in the online edition of the South Korean Chosun Ilbo in October last year, quoting US-based Radio Free Asia, said about 3,000 tourists visited North Korea in 2010 but the number was expected to be lower in 2011. One reason for the lack of interest, it said, was the restrictions on where tourists could visit.
	 
Genuinely up to speed
We've received an invitation to a business speed networking event. It's being held in Bar Six in Wyndham Street. We're told we can expect: "Focused activity to meet everyone in the room one-on-one; quickly identify people with synergy and easily sidestep people without." If that's not enough, the organisers will provide hints and tips to help deepen conversations and achieve results. If you're a bit dubious about the value of attending, fear not. It's being organised by a company called Genuine.

	Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com


No more fun for Mayo without Citi to kick around anymore?

Citi cheerleader Mike Mayo

Business

Opinion

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


Column

Lai See

.css-1m2rp1p{color:#34b8b5;}Lai See | No more fun for Mayo without Citi to kick around anymore?

Lai See | No more fun for Mayo without Citi to kick around anymore?