Citi selects new CEO from within
Citigroup Inc. named investment banking head Vikram Pandit chief executive and acting CEO Win Bischoff chairman on Tuesday, disappointing investors who wanted a big-name outsider to overhaul the bank.
Citi had been seeking a replacement for former CEO Charles Prince, who left Nov. 4 under pressure from shareholders frustrated by the performance of the largest U.S. financial services company. Citi shares have fallen by about a third this year, and the company has taken massive write-downs for mortgage-related holdings.
The appointment of Bischoff, 66, was a surprise. The acting CEO was chairman of Citi Europe. Former U.S. Treasury Secretary Robert E. Rubin, who served as chairman in the interim, will return to his duties as chairman of the executive committee.
Pandit’s career has included heading investment banking and capital markets at Morgan Stanley. He joined Citigroup five months ago when the bank bought his year-old hedge fund firm, Old Lane Partners, for $800 million.
But some investors expressed concern that the 50-year-old, India-born executive has never run a public company, let alone one as big and complex as Citi.
“There was some hope that somebody with a bigger name would be chosen, so maybe from that perspective there is some disappointment,” said Lee Delaporte, director of research at Dreman Value Management.
Citi shares fell $1.54 to $33.23.
Citi’s board came under fire in recent months as Citigroup reported billions of dollars in credit losses, and the board may face more criticism for what some investors have called a disappointing management search.
Wall Street had spent weeks trying to predict who would take on one of the highest-profile jobs in global finance.
Putative candidates included American International Group Inc. Chairman and former Citi Chief Operating Officer Robert B. Willumstad, Barclays President Robert E. Diamond Jr. and Wells Fargo & Co. Chairman Richard M. Kovacevich.
Citi said in November that it faced as much as $11 billion in fourth-quarter losses tied to mortgage investments. The company reported $6.4 billion in third-quarter write-downs and could face more losses from home loans and credit cards.
Pandit has no experience leading a consumer business, which at Citi generates more than half of overall revenue.
The new CEO was born in Nagpur, India, and has three degrees from Columbia University. Pandit’s unit at Morgan Stanley consistently performed well, but he was criticized by some insiders for being too conservative about taking trading and lending risks.
