Citigroup Inc 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 ONeill 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 banks announcement,Pandits name was gone from Citigroups website.
Chief Operating Officer John Havens,a long-time associate of Pandit,also resigned.
Citigroups stock tumbled 2.5 per cent in premarket trading following news of Pandits 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.
Pandits resignation comes after a series of high-profile defeats this year. In March the Federal Reserve rejected the banks 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 banks 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. The one-two punch of the results and then Pandits 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. Theres a perpetual cloud of uncertainty surrounding Citigroup. Theres always turmoil … thats had to affect the stock price.
Pandits 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 LP,for $800 million.
Citigroup had to shut down Old Lane,an early black mark for the executive. Critics have charged that Pandit was too timid,perhaps even too academic,to run a big consumer bank.