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Citigroup CEO Vikram Pandit steps down, Michael Corbat named replacement

10:29 AM, Oct 16, 2012   |    comments
Vikram Pandit
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(USA TODAY) -- Vikram Pandit, who steered Citigroup through the financial crisis, stepped down abruptly Tuesday, ending five tumultuous years at the helm of what is now the USA's third-largest bank.

The move came as surprise, a day after Citigroup reported earnings that, while down sharply from a year earlier, actually beat analysts's estimates.

Pandit's successor as CEO is Michael Corbat, who has been CEO of Citigroup's Europe, Middle East and Africa division, the bank said. Corbat has worked at Citigroup and its predecessors since he graduated from Harvard in 1983.

Pandit will also relinquish his seat on Citi's board of directors.

A second top executive also resigned as part of the shake-up: President and Chief Operating Officer John Havens, who was CEO of Citi's Institutional Client Group.

The changes are effective immediately. The bank offered no explanation for the sudden departure of its two top executives.

"It's coming out of strength, not weakness," said Erik Oja, S&P Capital IQ banking equity analyst. "Yesterday's earnings report was very positive. I would be very surprised if he (Pandit) was fired. He was good."

On Monday, Citigroup announced third-quarter earnings that beat analysts' expectations, after stripping out one-time items like a big write-down it had to take because it got less money than it had hoped when it negotiated to sell its stake in its retail brokerage.

Investors were pleased with the results and sent the stock up more than 5% Monday, up $1.91 to close at $36.66.

Oja speculated that Pandit's abrupt departure might have something to do with his compensation. His $15 million pay package was rejected by about 55% of shareholders in April.

Pandit, 55, said in a statement Tuesday that "now is the right time for someone else to take the helm at Citigroup" after the bank "emerged from the financial crisis as a strong institution."

Pandit joined Citigroup in 2007 when the hedge fund he founded was acquired by the bank. He quickly rose to CEO in December 2007. Earlier, he had ascended to head of investment banking at Morgan Stanley before leaving in 2005 to form the hedge fund.

A native of India, Pandit attended Columbia University at 16 and completed a bachelor's degree in three years. He earned a doctorate in finance in 1986.

Pandit faced harsh criticism after Citigroup took $45 billion in government bailout money in the 2008 credit crisis. It is widely believed that other, stronger banks were forced to take billions in bailout money to divert attention from Citigroup, whose financial situation was more precarious.

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