Who wants to run Citigroup? The New York Post ran on Monday with a story putting US Treasury Secretary Hank Paulson in the running — a story quashed in Tuesday’s FT. Said Paulson:
Let me say I’m going to be running full speed here at the Treasury right up until the end of President Bush’s term, that is what I am focused on and I’m focused on doing everything I can to help the US economy.
But hang on. Let’s call a spade a spade. Hank Paulson is already working for Citi…
M-LEC – the massively embarrassing ‘supersiv’ bailout elephant in the Paulson/Citi living room – has Hank’s prints all over it. Paulson spent most of the G7 meeting in October as M-LEC plenipotentiary – trying to goad other banks into sidling up to Citi. One minute Deutsche were out, and the next, they were supersivved. No matter though, it’s clearly not to be.
Who then, will be Citi’s next CEO? Here’s dealbreaker:
Remember those western movies where nobody wants to be sheriff because the bandits always come into town and kill whoever happens to be the local lawman?
Enter sheriff Vikram Pandit – who if made CEO will have enjoyed a truly meteoric rise to the top. Vikram Pandit, described by the WSJ as a “self-effacing derivatives wizard” moved to Citi from Morgan Stanley with the acquisition of the $800m hedge fund he ran, Old Lane. Pandit currently oversees Citi’s core investment bank and alternative-investments businesses.
There are, of course, plenty of reasons why even Pandit – the current favourite – won’t be leaping at the chance to be CEO. As dealbreaker points out, taking on the top-job at Citi could be something of a poisoned chalice:
Under Sarbanes-Oxley, the new chief executive would have to certify Citi’s financial results and the quality of its internal controls. We’re told that at least a couple of candidates have shied away because their conversations have not made them comfortable with the idea that Citi fully comprehends it’s exposure to credit markets. This means that the new chief could be faced with the unappetizing prospect of endorsing financials he couldn’t be certain about and overseeing a bank that continues to experience a series of share-price battering losses.
So where do you find a rat to jump onto a sinking ship? From another sinking ship of course!
Apart from the Bush administration, Citi sheriff-hunters have also been scouting the military dictatorship of Pervez Musharraf for possible Citi candidates. Shaukat Aziz, former head of Citi’s private banking business and until two weeks ago, prime minister of Pakistan, is also said to be under consideration.
One thing’s for sure, by the time Citi lands its new sheriff, we’re going to have seen a hell of a colourful cast.