Shock as Pandit resigns from Citi
VIKRAM PANDIT shocked Wall Street yesterday by resigning as chief executive at Citigroup after a clash with the board over a series of recent missteps by the bank, according to people close to the situation.
Citi insiders said Mr Pandit opted to leave immediately after a tense discussion on Monday with the board. One said the underlying issues were Citi’s failure to pass Federal Reserve stress tests earlier this year, a defeat on a “say on pay” vote and the handling of the sale of the bank’s stake in Smith Barney, the retail brokerage, to Morgan Stanley.
John Havens, chief operating officer and a close Pandit lieutenant, also resigned.
The turmoil was the latest setback for a $1.9 trillion (€1.45 trillion) bank by total assets that, at its creation in 1998 through the merger of John Reed’s Citicorp and Sandy Weill’s Travelers, was hailed as a state-of-the-art financial supermarket. Since its credit bubble peak, the share price has fallen more than 90 per cent, and it barely avoided nationalisation.
The bank employs 2,200 people in Ireland, mainly involved in developing and selling financial products and services for multinational companies.
Citi portrayed Mr Pandit’s departure, after five years at the helm, as amicable. Mr Pandit, 55, told the Financial Times he had made the decision and told Mike O’Neill, chairman, on Monday: “When you make a decision, you move on; I don’t believe in lame duck sessions.”
His successor, Michael Corbat, 52, has been with the company since 1983. His most recent role was head of Europe, the Middle East and Africa. Earlier he ran Citi Holdings, the so-called “bad bank” where Citi quarantined its toxic assets. This was a key strategy from Mr Pandit to try to restore investor confidence.
The announcement came just a day after the bank reported third-quarter profits, which were sharply lower but better than analysts’ expectations, and came as a surprise to Citi bankers.
While Mr Pandit had worked with his board on succession planning in recent months, he had not been expected to depart before Citi completed its post-crisis rehabilitation.
In a statement Mr O’Neill saluted Mr Pandit. “Since his appointment at the start of the financial crisis . . . Vikram has restructured and recapitalised the company, strengthened our global franchise and refocused the business.”
Mr Pandit became chief executive in 2007 after his predecessor, Chuck Prince, stepped down just as the bank was reporting increasing subprime-related losses. He shepherded Citi through the crisis but encountered criticism from regulators and investors, culminating in the Fed blocking a capital pay-out in March and shareholders voting against Mr Pandit’s pay scheme in April.
For much of his tenure he took a notional $1 salary in a personal vow of austerity. But he did so after reaping more than $160 million from the sale to Citi of his Old Lane hedge fund. – (Copyright 2012 The Financial Times Limited)