Gasparino speculatively Tweets that the board thought the Morgan Stanley Smith Barney deal was the “last straw.”
If you’re not familiar with the Morgan Stanley Smith Barney deal, last month Citigroup and Morgan Stanley agreed to value the retail brokerage joint venture at $13.5 billion, Dealbook’s Michael J. De La Merced reported.
With that valuation, Morgan Stanley won the pricing battle against Citi and was able to start purchasing Citi’s stake in Stanley Smith Barney closer to its valuation estimate.
Citi had believed that Morgan Stanley Smith Barney was worth $22 billion, according to Bloomberg News.
So basically the thinking is that in such a crucial deal, Citi got hosed.
Term Sheet banking beat reporter, Stephen Gandel agrees. Here’s what he told fellow reporter Dan Primack over I.M. this morning:
Here’s a gut take (via IM) from Stephen Gandel, who covers banks for the Term Sheet section of Fortune.com:
My guess is that it was three things:
The fact that Morgan Stanley got the best of them on the Smith Barney valuation, the fact that they missed the housing market and the huge swing and miss on pay all came together.
Apparently, Micheal O’Neill, chairman of the board, and Pandit were not getting along. And it could be that the board just made its decision that it wasn’t going to back Pandit’s pay package after the shareholder vote. But apparently there has been some tension between Pandit and the board for some time. Also, on a recent trip to Asia, Pandit apparently spent a lot of time with Corbet, who was running the region. So move may have been in the works, but timing of the resignation seems weird.
Citigroup said in its third-quarter earnings release yesterday that it took a pre-tax loss of $4.7 billion ($2.9 billion after-tax) on the sale of a 14% interest and other-than-temporary impairment of the carrying value of Citi’s remaining 35% interest in the Morgan Stanley Smith Barney (MSSB) joint venture.
UPDATE: This just in from Bloomberg News…