When Vikram Pandit abruptly left Citigroup Inc. (NYSE: C) last month, the story was that it was his decision to do so. Maybe, but Pandit’s missteps over the years did not leave him with much support in the bank’s boardroom. His foul-up of the sale of Citi’s retail brokerage to Morgan Stanley (NYSE: MS) and Citi’s failure to pass the federal stress tests were just two examples.

But what really stirs up investors is that the bank is not currently and will not for the near future be paying a dividend. At least one investor thinks that Citi should sell of a piece of the business.

The Benedictine Sisters of Mount St. Scholastica and the AFSCME employees pension plan have filed a shareholder proposal with Citi asking the board to consider selling off one or more pieces of Citi’s business. Trillium Asset Management sent a resolution to Citi’s board on behalf of the nuns and the union:

Despite some positive steps taken since the start of the financial crisis, we believe Citigroup’s progress toward simplifying and de-risking its business has been slow and incomplete. Citigroup boasts many attractive attributes, but remains burdened by excessive complexity, as well as the stigma and risks associated with being named a “too big to fail” institution. These factors could threaten stockholder return through breakdowns in risk management, increased regulatory scrutiny, higher litigation expense, greater capital requirements and poor public perception, among other challenges.

The resolution asks Citi’s board to establish a committee from among its independent members to explore transactions that could enhance shareholder value. The AFSCME’s chairman noted, “There is a gap of almost $50 billion between what Citi says its assets are worth and what the market is saying. It is high time that the board gave shareholders a plan for recovering this value.” Could be that the value has disappeared, and nobody wants to know.

Paul Ausick

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