Photo: Courtesy of Wharton
This morning we got the news that Citi CEO Vikram Pandit had suddenly stepped down from his post and is leaving the bank’s board. What we didn’t get was exactly why.Speculation for the move has ranged from Pandit’s desire to start a hedge fund to clashes with shareholders over pay.
The WSJ has another answer. They report that Pandit stepped down after clashes with the board over performance and strategy agt the institutional clients group and other businesses. They also say there were problems with institutional clients as well.
CNBC’s Jim Cramer reports that he was forced out by the board, and Kayla Tausche adds that pay was a factor in Pandit’s exit.
Fox Business reporter Charles Gasparino tweeted that it was “obvious that Vikram Pandit was fired,” and added that the board must have felt that Citigroup’s loss in the deal Morgan Stanley Smith Barney deal was “the last straw.”
All that said, Citi’s stock price has dropped 89% during Pandit’s tenure.
Pandit’s replacement, Michael Corbat, told Citi employees in a memo to “expect some changes” after reviewing operations, signaling that the bank will change course somewhat. Corbat is, after all, a traditional banker while Pandit hails from the world of investment banking and hedge funds.
That difference is something former FDIC Chair Sheila Bair pointed out in her book about the financial crisis, Bull By The Horns. She said that Citi needed to be fixed by a traditional banker (and she was rough on Pandit in general).
The analysts seem to agree with Bair. From the WSJ:
“Citi now to be run by traditional bankers—we think this could be an intermediated-term positive,” wrote Wells Fargo Securities analyst Matthew Burnell. “Corbat’s elevation strikes us as a positive for Citi, as it brings an experienced banker into the CEO’s role.”
We’ll keep updating you on this as we know more.