CLSA Analyst: We Will Know 5 Days From Now Whether Citigroup's CEO Still Has A Job - Citigroup (NYSE:C)

Giving a respite to Wall Street, all 31 banks subjected to Federal Reserve's stress test have cleared the first round. Mike Mayo, CLSA bank analyst, was on CNBC Friday to weigh in on this and to discuss why the second round of the stress test is so crucial for Citigroup Inc C CEO Michael Corbat.

The Good And The Bad

“Well, I'll say the stress test is good news-bad news,” Mayo said. “The good news is the industry is resilient. Based on some numbers from the Fed, the industry can survive not only one financial crisis, but two financial crisis.

“The bad news is that this can be a false positive and a false negative for individual banks.”

He explained further, “The big news comes out five days from now. The last two years, one out of every eight banks failed on qualitative factors, and those are issues that we won't know until five days from now.”

Make Or Break For Citi's CEO

Mayo was asked why he thinks that Citigroup's CEO could lose his job if the company fails the second test. He replied, “We will know five days from now whether or not the CEO of Citigroup, Mike Corbat, still has a job.”

He elaborated, “Last year [...] when Citi failed the stress test the second time in three years, we said, ‘Somebody at Citigroup should be held accountable.'

What happened was the CEO of Citigroup came out and said, ‘Hold me accountable.' Well, guess what? It's a year later and the CEO of Citigroup needs to be held accountable.

“If Citigroup fails the stress test, he – and I would imagine – some other people at Citigroup will be gone. If they pass the Fed's stress test, then this could be a multi-year inflection point,” Mayo concluded.

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