Citi CEO Pandit exits abruptly after board clash

Tue Oct 16, 2012 9:58pm EDT
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By Carrick Mollenkamp and Jed Horowitz and Rob Cox

(Reuters) - A regular Citigroup Inc board meeting to talk about quarterly results took an unexpected turn on Monday night, when simmering tensions between Chairman Michael O'Neill and then Chief Executive Vikram Pandit came to a boil.

O'Neill criticized Pandit for being too detached from the bank's day-to-day operations, and told him to get more involved, according to sources briefed on the situation.

Instead, Pandit, who had been thinking of leaving for some time, decided to resign. O'Neill did not stop him, the sources said. John Havens, the bank's chief operating officer and a close confidant of Pandit's, also followed in his boss's footsteps out of the third-largest U.S. bank.

In the ensuing scramble, the board pulled out its succession plan and installed Michael Corbat, head of Europe, Middle East, and Africa, as CEO, announcing the changes to stunned employees, Wall Street and investors early on Tuesday morning.

Pandit believes he is leaving the bank in good shape, but analysts said that Corbat has a good deal of hard work to do. Citigroup faces a shifting regulatory environment, a weak global economy, and questions about its expenses, and many analysts and even employees at the bank wonder if the bank is too big to manage.

Pandit was known to have adamantly opposed any break-up of the bank. His exit could revive that talk, particularly in light of comments this summer by Sandy Weill - the man who pioneered the financial supermarket model - suggesting big banks should be broken up.

But on a conference call, Corbat emphasized that he does not wish to change the strategic direction of Citigroup.

"There is no question that Vikram laid the foundation to support Citi's long-term growth," Corbat said.   Continued...

Citigroup's CEO Vikram Pandit gives an interview on the floor of the New York Stock Exchange in this June 18, 2012 file photograph. REUTERS/Brendan McDermid/Files