Econintersect: Vikram Pandit, the man who became CEO (Chief Executive Officer) of Citigroup just in time to experience what it was like to participate in the end of Chuck Prince's dancing (Pandit's predecessor), has suddenly resigned. The announcement came simultaneously with the resignation of COO (Chief Operating Officer) and President John Havens.
Pandit's successor is Michael Corbat, who was previously the bank's chief for Europe, the Middle East and Africa.
There has been speculation about why the sudden resignations have occurred. Pandit, in his resignation statement, said that he was leaving at a time when Citigroup was well positioned to continue recent profitablilty and growth. A statement from Citigroup praised Pandit for his leadersgip throught the financial crisis.
Havens said that he chose to move his resignation in from year end, when he had planned to retire, to coincide with Pandit's announcement.
An article by BBC suggested that the resignation could have been prompted by "regulatory baggage", a term used by Anthony Polini, an analyst with Raymond James. Polini said that Pandit had some disagreements with regulators and was not well liked by them.
Melanie Rodier, Wall Street & Technology, says that President Obama considered forcing the break-up of Citigroup in 2009, but that Geithner was opposed and nothing transpired. Rodier references a 2011 book by Ron Suskind. Rodier also wrote:
Pandit had another vocal opponent in Sheila Bair, an influential bank regulator who ran the Federal Deposit Insurance Corp. during the crisis, the Washington Post reports. “Bair wanted the government to fire Pandit after it extended billions in bailouts and guarantees to his company. Geithner disagreed, and Pandit kept his job,” according to the paper.
In an interview with with CNBC Tuesday after Pandit’s departure was announced, Bair said Citigroup has lacked “a clear strategic direction and focus” under his watch.
Meanwhile, CNBC's Jim Cramer and the Wall Street Journal reported that Pandit was forced out in a disagreement with the board, which was frustrated with the performance of the institutional clients unit, among other issues – which could explain the equally sudden departure of Citi president and COO John Havens.
In what may have been the last straw for Pandit, Bair recently released a book, called “Bull by the Horns”, which was highly critical of Pandit and Wall Street.
Here is the full press release from Citigroup:
For Immediate Release
Citigroup Inc. (NYSE: C)
October 16, 2012
Vikram Pandit Steps Down as CEO of Citigroup
Board of Directors Elects Michael Corbat as CEO
Board praised Vikram Pandit’s “leadership, integrity and resilience in guiding Citi through the crisis and positioning it well for the future.”
Mike Corbat has “demonstrated outstanding leadership qualities… [and] brings deep and varied operating experience across a broad spectrum of the financial services industry,” Chairman Michael E. O’Neill stated.
“Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking,” Mr. Pandit said.
“The fundamentals we have in place today are solid, and we are on the right path… Citi’s businesses, footprint and talent are unmatched, and we will be relentless in our drive toward operating excellence and risk management,” Mr. Corbat said.
New York – The Board of Directors of Citigroup today announced that Vikram Pandit has stepped down as the Company’s Chief Executive Officer and as a member of the Board, effective immediately. The Board also announced it has unanimously elected Michael Corbat CEO and a director of the Board. Mr. Corbat previously served as Citigroup’s CEO of Europe, Middle East and Africa.
Mr. Pandit said: “Thanks to the dedication and sacrifice of people across Citigroup, we have emerged from the financial crisis as a strong institution. Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking. Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup. I could not be leaving the Company in better hands. Mike is the right person to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this Company. I will truly miss the wonderful people throughout this organization. But I know that together with Mike they will continue to build on the progress we have made.”
Michael E. O’Neill, Chairman of the Citigroup Board of Directors, said: “We respect Vikram’s decision. Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the Company, strengthened our global franchise and re-focused the business. The Board and I are grateful to Vikram for his leadership, integrity and resilience in guiding Citi through the crisis and positioning it well for the future. We wish him all the best with the next stage in his career.
“Mike Corbat has demonstrated outstanding leadership qualities and the ability to sharpen our focus on achieving strong, sustained operating performance,” Mr. O’Neill continued. “From his nearly three decades at the Company he brings deep and varied operating experience across a broad spectrum of the financial services industry. He has managed numerous institutional businesses, including sales and trading, capital markets, corporate and commercial banking, and such consumer businesses as wealth management, mortgages and credit cards. During the financial crisis, he successfully led the divestiture of more than 40 businesses, helping to strengthen the Company’s balance sheet substantially. In this role, he also restructured and rebuilt a number of the Company’s consumer-facing businesses, including the mortgage and credit card businesses.
“Mike is a proven, hands-on leader who is known for his focus on enhancing productivity, holding people accountable and practicing sound risk management. He has consistently delivered impressive bottom-line results at many of our major global business units and has forged a strong track record of improving efficiency and mitigating risk while also optimizing the allocation of the Company’s capital,” Mr. O’Neill concluded.
Mr. Corbat said: “Given the considerable progress we have made in recent years, Citigroup possesses unique strengths to take on exciting opportunities around the world. With unprecedented economic, regulatory and political change, my top priority is to keep us focused on what our clients need, both today and tomorrow. The Board and I firmly believe in Citigroup’s future, and together are committed to delivering sustained profitability and shareholder returns.
“The fundamentals we have in place today are solid, and we are on the right path. In this dynamic market environment, however, we must efficiently allocate our resources and offer the products with the highest potential in the most productive markets. Citi’s businesses, footprint and talent are unmatched, and we will be relentless in our drive toward operating excellence and risk management. I look forward to working with our talented management team and dedicated employees to chart that future course.”
Mr. Corbat added: “I also wish to extend my personal appreciation to Vikram for all he has achieved. Without his leadership, Citigroup would not be so well positioned globally to tackle the challenges and opportunities ahead of us.”
President and COO John P. Havens also Resigns from Company
The Company further announced that President and Chief Operating Officer, John P. Havens, who also served as CEO of Citi’s Institutional Clients Group, has resigned. Mr. Havens said that he had already been planning retirement from Citi at year-end but decided, in light of Mr. Pandit’s resignation, to leave the Company at this time.
“Since joining Citigroup five years ago, John has served as a trusted partner to our institutional clients, helping some of the largest corporations and governments in the world navigate through one of the most challenging financial markets in history. In the last two years he has successfully taken on the additional role of overseeing Citigroup’s operations, where he drove significant improvement and streamlining. We wish him the best in the future,” Mr. O’Neill said.
Daniel Gross at The Daily Beast has a summary of all the gossip.
- Vikram pandit Steps Don as CEO of Citigroup (Press release, Citigroup, 16 October 2012)
- Citi Chief on Buyouts: 'We're Still Dancing' (Dealbook, New York Times, 10 July 2007)
- Citigroup boss Vikram Pandit resigns (BBC News, 16 October 2012)
- Why Did Citi's Vikram Pandit Suddenly Quit? (Melanie Rodier, Wall Street & Technolgy, 16 October 2012)
- Citi CEO Vikram Pandit Unexpectedly Quits—Let the Conspiracy Theories Begin (Daniel Gross, The Daily Beast, 16 October 2012)