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Thursday, 18 October 2012 00:05 - - {{hitsCtrl.values.hits}}
REUTERS: Citigroup Inc’s Vikram Pandit quit as chief executive on Tuesday after months of simmering tensions with the board – an abrupt change that surprised investors and employees of the third-largest US bank.
The bank’s board of directors named Michael Corbat as Citigroup’s new CEO. Pandit told Reuters the decision to leave was his own and that he had been contemplating the move for some time.
Multiple sources within and outside the bank said Pandit’s departure followed months of tension with Chairman Michael O’Neill over a range of issues, including compensation and the role of Chief Operating Officer John Havens. On Tuesday, Havens also resigned.
Pandit has been involved in some high-profile snafus this year, including the bank’s sale of the remaining stake of its retail brokerage business to Morgan Stanley at a loss.
Senior executives were mostly stunned by Pandit’s departure. It is not clear precisely what led Pandit to quit, but the decision to swiftly name Corbat as CEO is a clear sign that O’Neill is now fully in control of the bank, according to one person familiar with Citigroup.
On a conference call with investors and analysts Tuesday night, O’Neill gave assurances that there were no other shoes to drop and that the “board remains comfortable with the strategy of the firm.”
He also said the board had considered outside candidates before choosing Corbat and that Corbat knew he was under consideration for the job for “quite some time.”
Citigroup shares rose as much as 2 per cent as some investors said they were not sorry to see Pandit leave. During his tenure, he was known to have adamantly opposed any break-up of the bank, something some money managers argued would increase shareholder value.
His resignation could revive that talk, particularly in light of comments by former Citi CEO Sandy Weill this summer suggesting big banks should be broken up.
The board’s relationship with Pandit was already under pressure after shareholders rejected the CEO’s pay package in an advisory vote in April. He was awarded more than $ 15 million in 2011 compensation, but 55 per cent of shareholders voted against it. The pay issue was thought to still be a source of friction internally, though O’Neill “categorically” denied it.
O’Neill’s ascension to chairman and the addition of new board members earlier this year upended the status quo and likely set the stage for disagreements on strategic direction between the chairman and the CEO, a second person familiar with the situation said.
