Vikram Pandit resigns as Citigroup CEO

REUTERS

NEW YORK

CITIGROUP Chief Executive Vikram Pandit resigned abruptly on Tuesday, effective immediately, a shock change at the top of the bank just one day after a surprisingly strong quarterly earnings report.

A statement from Chairman Michael O’Neill said Michael Corbat, previously chief executive for Europe, Middle East and Africa, would succeed Pandit as CEO and as a board member.

Within minutes of the bank’s announcement, Pandit’s name was gone from Citigroup’s website.

Chief Operating Officer John Havens, a long-time associate of Pandit, also resigned.

Citigroup’s stock tumbled 2.5 percent in premarket trading following news of Pandit’s departure, but later the shares were up 20 cents to $36.86 in early trading on the New York Stock Exchange.

Investors questioned why Pandit would leave now after keeping the bank afloat during the financial crisis and getting it back on a firmer footing.

“I would have expected he wanted to stay around and see some of the fruits of his labors there,” said Peter Jankovskis, co-chief investment officer of Oakbrook Investments LLC in Lisle, Illinois.

Pandit’s resignation comes after a series of high-profile defeats this year. In March the Federal Reserve rejected the bank’s capital plans after a stress test; Pandit had led analysts and investors to believe the dividend-raising plans would be approved.

Last month, Pandit agreed to a low sale price for his bank’s stake in the brokerage operated by Morgan Stanley.

Citigroup had to take a $4.7 billion charge in the third quarter to write down the value of that stake.

Citigroup shares rose sharply on Monday after the bank reported third-quarter results that were much better than analysts expected.

The one-two punch of the results and then Pandit’s exit point to what analysts say has been a years-long unsettled atmosphere around the bank.

“What Pandit and Havens did was increase the uncertainty around Citi,” said Matt McCormick, banking analyst and portfolio manager at Bahl & Gaynor in Cincinnati, Ohio.

“There’s a perpetual cloud of uncertainty surrounding Citigroup. There’s always turmoil ... that’s had to affect the stock price.” Pandit’s resignation revived questions that were asked from the day he took the job: whether he had the right experience to lead Citigroup in the first place.

Born in Nagpur, India, the 55-year-old Pandit obtained two electrical engineering degrees and a doctorate in finance from Columbia University. He joined Citigroup in July 2007 when the bank acquired his hedge fund and private equity firm, Old Lane Partners, for $800 million. Citigroup had to shut down Old Lane the next summer, an early black mark for the executive.

Critics later charged that Pandit was too timid, perhaps even too academic, to run a big consumer bank.

“He was not beloved by Wall Street. He was thrust into that position - he’s a hedge fund guy,” McCormick said.

His successor, Corbat, has held a number of senior roles at Citigroup, including running Citi Holdings, the unit established to house businesses and assets the company wants to shed.

A fixed income salesman by training, Corbat started out at Solomon Brothers in 1983.

More recently, he has been credited with successfully restructuring some of Citigroup’s consumer and credit card units.