Or, to go even further, are the stalwarts of Citi a symbol of board resurgence? That’s the question asked by Benjamin W. Heineman, Jr on Harvard Law’s blog on Monday. Is this simply a long campaign by Michael O’Neill to push Vikram Pandit out, or does this incident underscore a more basic truth:
Independent boards of directors are still the best mechanism— or the least worst one — for holding business leaders accountable, even if many boards have failed in their attempts to do this, often in spectacular fashion.
“These are the times that will define us all,” Vikram Pandit told fearful Citi staff on March 10, 2009. They’re certainly going to define him.
Is Citi’s CEO going out on top? (‘Top’ in relative Citi terms)
Getting out now that banking is boring? Or just possibly — board pressure. Compared to Jamie Dimon and Lloyd Blankfein, the only crisis-era survivors left after Pandit (who himself already took over from Chuck Prince, who led Citi into the crisis), the Citi chief never had the chairman’s role. Richard Parsons, who had served with Pandit since February 2009, made plans to step down in March.
As we went to pixel the WSJ was reporting a board clash but what actually happened is still unclear. The Journal says it was “strategy and operating performance at businesses including its institutional clients group, according to people with knowledge of the bank.”
Update — From the FT:
People close to the situation said Mr Pandit opted to leave immediately after a tense board meeting where succession planning was discussed. One said the underlying issues were Citi’s failure to pass stress tests earlier this year, a defeat on a “say on pay” vote and the handling of the sale of the bank’s stake in Smith Barney to Morgan Stanley.
(Felix says in response that on governance, “Citi can credibly claim to be leagues ahead of Goldman.”)
Well, we are going to miss the Pandit years… Read more
COO John P. Havens gone too. Mike Corbat, CEO of Europe, Middle East and Africa since the start of the year, is to step up to the big chair.
And we thought the figures were pretty good. Odd.
He had been tipped for a more extended stay. Read more
An advisory vote, but still – Pandit’s pay pack only got 45 per cent shareholder approval in Dallas. US corporate governance on a roll lately (or is that diminished expectations?).
FT Alphaville has intercepted a recent phone call between banks and their regulators!!!
Regulators: “We’re going to revise the capital adequacy framework and increase transparency in the reporting of risk on bank balance sheets.” Read more
Citigroup chief executive Vikram Pandit has called for banks to be more transparent about how they measure their risk in an FT oped, the newspaper reports. He writes that each bank should be required to explain how it would measure risk in a standard portfolio, allowing investors to “compare apples with apples”. “Shining a light on the reality behind reported capital ratios would encourage financial institutions to take a more conservative approach to risk. Investors would reward institutions whose approach to risk and capital holdings seem to be sound and to punish those who appear to get it wrong,” Mr Pandit writes. Mr Pandit’s proposal calls for banks to apply their models against a standard portfolio. Mark Carney, chairman of the Financial Stability Board, a global body of regulators, said Mr Pandit’s idea could have merit. “It couldn’t hurt. It would be better if you had four portfolios rather than one.”
Citigroup will cut about 4,500 jobs in coming quarters, reports Bloomberg, and will take a charge of about $400m in the fourth quarter tied to the reductions. Citi chief executive Vikram Pandit outlined the plan at an investor conference in New York. The bank will take further charges of about $600m, says the FT, of which about $200m will be due to “debt valuation adjustments”, an accounting treatment that leads to gains when banks’ debt falls in value, and losses when it rises. In the third quarter, Citi recorded a $2.6bn to its revenue because of DVA. A further $300m is from a hedging loss related to tightening credit spreads. Mr Pandit said the estimated $500m in losses could change in the three weeks before the end of the quarter. About 900 job cuts were reported last month.
Citigroup’s chief executive Vikram Pandit says he expects the company will return significant amounts of capital to shareholders from 2012, the WSJ says. Mr Pandit said the bank is still on track to return capital to investors next year, and that he believes Citi can return significantly more capital in 2013, assuming regulators agree. He spoke of expansion plans and continuing growth in emerging markets. A key factor is Citi’s big deferred-tax asset, the result of the billions in losses during the financial crisis, which it can take advantage of as it books profits.
Citigroup has awarded its chief executive, Vikram Pandit, a long-term pay package of restricted shares, deferred cash and stock options that could net him more than $22m by the end of 2015 if the bank achieves a range of goals, reports the FT. The move comes as Citi seeks to build on its first annual profit in three years, and highlights its gradual recovery from near collapse in the financial crisis. Citi said earlier this year that Pandit’s annual salary would jump to $1.75m. He pledged in 2009 to take an annual salary of $1 until the bank achieved sustained profitability. Richard Parsons, the bank’s chairman, said the award was designed to retain Pandit as CEO and “reward him for future performance.” DealBook says it “also could signify the unofficial end of the post-bailout pay era”.
Citigroup has come under attack from a prominent analyst and accountancy experts for failing to disclose regulatory criticism of the bank’s valuation of troubled securities during the financial crisis, the FT reports. Newly released documents show that on February 14 2008, the Office of the Comptroller of the Currency, one of Citi’s main regulators, expressed concerns about the way Citi valued mortgage-backed securities. In a letter sent by John Lyons, a senior OCC official, to Vikram Pandit, Citigroup’s chief executive, the regulator said it had found “several deficiencies that need to be addressed” in the way Citi valued illiquid collateralised debt obligations. Citi suffered more than $50bn in losses during the crisis, largely due to writedowns on CDOs, prompting the US government to launch a $45bn bail-out of the bank. For more see FT Alphaville.
That’s an old Valentine’s day letter — sent on February 14, 2008 — from John Lyons at the Office of the Comptroller (OCC) to Citigroup CEO Vikram Pandit. We bring it up because it’s the subject of a new column by Bloomberg’s Jonathan Weil, provocatively titled; “What Vikram Pandit Knew, and When He Knew it.” The document itself was released recently by the the Financial Crisis Inquiry Commission. Read more
Citigroup has promoted the head of its underperforming securities business to the second-most senior position in the company as Vikram Pandit, the chief executive, reshuffled the US bank’s top ranks, reports the FT. John Havens, a close ally of Pandit’s who has worked with him for more than two decades, will become Citi’s president and chief operating officer in charge of day-to-day operations, the bank said on Wednesday. The move consolidates Havens’ status as heir apparent to Pandit, who has led Citi since December 2007, although some insiders predict that Havens will follow Pandit once he leaves.
Citigroup chief Vikram Pandit and the Bank of England’s governor Mervyn King clashed on Monday over Basel III proposals and new international rules on capital standards, reports the FT. Speaking at the same conference in New York, the two men took diametrically opposed positions on regulators’ push to increase banks’ capital adequacy and risk management – the US banker attacking them for going too far at the risk of a fresh financial crisis, and the central banker saying they did not go far enough. Their contrasting views highlighted tensions between banking chiefs and regulators amid a global overhaul of financial sector rules.
Inevitable, really. Though we wouldn’t have expected the staid Norwegian central bank to be the first (?) to take up legal arms.
After the US Securities and Exchange Commission exposed Citi’s super senior subprime slip — in which the bank misled investors over its subprime exposure between July and October 2007 — now come the lawsuits. Read more
Citigroup is selling most of its interests in its private equity fund of funds and other investments to Lexington Partners in a deal affecting about $5bn in assets, as part of chief executive Vikram Pandit’s plan to streamline the bank. StepStone Group will buy Citigroup’s management platform and will manage the assets on Lexington’s behalf as part of the transaction, the FT reports.
Bloomberg’s “Finance 50” ranking of the best paid CEOs of America’s 50 top financial companies — and Wall Street’s finest would dearly love to be at the bottom. They may have got their wish, FT Alphaville writes. Read more
Citigroup’s best quarter in almost three years failed to please frustrated investors at its annual meeting on Tuesday, as shareholders pilloried the bank for its feeble share price and the unsatisfactory pace of its turnaround, reports the FT. Vikram Pandit, Citi’s chief executive, told shareholders he felt a “whole lot better” than he did a year ago and claimed that the bank was on the right track.
Or is this damning Vikram Pandit with faint praise? Via Reuters on Monday:
RTRS-CITIGROUP INC <C.N> CHAIRMAN PARSONS SAYS PANDIT ‘HAS DONE A TREMENDOUS JOB’ AS CITI CEO – BLOOMBERG TV Read more
Vikram Pandit, Citigroup’s chief executive, is on Thursday expected to outline an ambitious new strategy to investors and predict that the US bank could earn as much as $20bn from its core business within a few years, a huge increase from current levels. The move marks an effort by Pandit to shift attention away from Citi’s huge losses and government bail-outs, and also raises the stakes over his CEO role by linking his future to the success of the strategy and Citi’s financial performance.
Dear Vikram Pandit,
FT Alphaville was a little bemused by your testimony to the Congressional Oversight Panel on Thursday, in which you blamed your bank’s near collapse on the nefarious activities of short-sellers. Read more
Vikram Pandit, chief executive of Citigroup, on Thursday blamed short selling rather than structural or management weaknesses for the bank’s near-collapse in 2008 and thanked taxpayers for its government bail-out. His comments, to the bipartisan Congressional Oversight Panel, are likely to be disputed by analysts who have identified fundamental problems with Citi’s balance sheet. In his testimony, Pandit, who also backed the Obama administration’s “Volcker rule” to ban banks from prop trading, said Citi had repaid the government $20bn in bail-out funds, $3bn in dividends and $5.3bn in premiums on the asset guarantee programme.
Citigroup plans to sell or split off its $10bn Citi Private Equity unit, expanding the list of money-management businesses the US bank is disposing of to reduce debt, reports Bloomberg. Citi Private Equity oversees about $2bn of Citi’s money with the remainder from outside investors. Meanwhile, reports the FT, Vikram Pandit, Citi’s CEO, hit back at critics, insisting his strategy of international growth – particularly in emerging markets – will restore Citi’s performance.
Independent research firm Portales Partners on Wednesday issued the pithiest take we’ve seen on Vikram Pandit’s internal memo regarding Citi’s Tarp repayment.
We quote: Read more
Here’s the latest development in the peculiar saga that is the ongoing tussle over Citi’s Mexican subsidiary, Banamex.
From the FT: Read more
It’s a perfect day for reports to emerge from Washington about the US administration’s plans to curb pay for bank employees – including traders and loan officers as well as executives.
It comes on the heels of Thursday’s stark admission by Citigroup CEO Vikram Pandit that, well, yes, $100m is a bit much to pay any bank employee in annual salary. Read more
Breaking pre-market news on Friday,
– Rio Tinto announces joint venture with BHP Billiton, $15.2bn rights issue —statement, statement, statement, statement, statement, statement, statement, statement. Read more
So declares the latest issue of Condé Nast’s Portfolio magazine, which features a list of “leaders who helped drive their companies into the ground”.
The list is compiled in consultation with a panel of “experts” from business schools around the US. The panelists were “asked to consider each CEO’s record of creating or destroying value, innovation, and management skills or lack thereof,” Portfolio says. Read more
Vikram Pandit vowed to stay on as Citigroup’s chief executive and repay $45bn in government aid, as angry investors attacked the troubled bank’s current and previous management and directors at a heated annual shareholder meeting in New York. Pandit said that investors and employees had “paid a dear and heavy price” as Citi accumulated huge losses and saw its shares plunge, but he promised “a bold new beginning” under his leadership.
Vikram Pandit, Citigroup’s chief executive, will on Tuesday try to convince investors at the group’s annual meeting that Citi is on the road to recovery, even as it emerged that officials at the Federal Deposit Insurance Corporation have privately discussed replacing Pandit if Citi needed more government aid. The FDIC is just one of various regulators to have a say on Pandit’s future if Citi requires a fourth bailout after the completion of “stress testing” of its health.