This is a shocker. Vikram Pandit has stepped down as CEO of Citigroup. He’s being replaced by Michael Corbat, the company’s CEO of Europe, Middle East and Africa. COO John Havens is also stepping down. Citigroup shares are up 1% after initially falling in pre-market trading.
Pandit and Havens appear to have been fired, though the exact reasons remain unclear. The Wall Street Journal says it was clash over strategy and performance while CNBC says compensation was the key issue.
Citi’s press release implies Pandit is leaving on his own accord—”We respect Vikram’s decision,” said chairman Michael O’Neill—but the timing suggests otherwise. In August, the Journal reported:
A CEO change isn’t imminent. The 55-year-old Mr. Pandit has told colleagues that he intends to stay for several years, until the banking giant is on stronger footing and he has more fully put his stamp on the company. Mr. Pandit has the full support of the board as well as a retention package valued at more than $16 million, including the deferred stock.
Well, some portion of that paragraph was wrong!
The promotion of a long-time employee contrasts with the choice of Pandit, a relative outsider, five years ago. It suggests that the firm is attempting to turn back towards its more staid retail banking roots and away from its Wall Street business. Barclays made a similar choice back in August when it chose Anthony Jenkins—formerly the head of its retail and business banking divisions—to replace Bob Diamond after the latter’s reputation was tarnished by the LIBOR scandal.
The move follows a mediocre earnings announcement yesterday; while adjusted earnings beat analyst expectations, a number of one-time charges took a toll on the bank’s real revenue.
This is the second management shake-up since Pandit was first named CEO in December 2007. Pandit appointed the outgoing Havens as president and COO back in January 2011. The duo have worked together for 27 years, first at Morgan Stanley and later at a hedge fund they ran together, Old Lane LP.
Corbat will be charged with revitalizing the bank’s battered reputation. Citi has struggled to recover from the effects of the financial crisis, and is still seen to be lagging behind his peers.
Corbat is a long-time employee of Citi, starting his career at Salomon Brothers (a Citi legacy firm) in fixed income sales after graduating from Harvard in 1983. His experience in emerging markets could be his strongest asset—the company highlighted its focus on Latin America and Asia in a conference call yesterday.
At Harvard, Corbat was an offensive guard who was once eyed by NFL scouts. A 1982 profile of him in The Harvard Crimson began, “The ladies who serve and prepare the food at Currier House all have crushes on senior Mike Corbat.”
We’ll keep updating as we have more information.