Citigroup underwent a massive and unexpected overhaul yesterday as two of its highest executives resigned.
Vikram Pandit, Citigroup’s chief executive officer, and John Havens, Pandit’s top aide and the company’s chief operating officer and president, each resigned in what the Washington Post has characterized as a “complete and unexpected break.”
Pandit joined Citigroup in 2007, and is largely credited with steering the bank through the financial crisis of 2008 and the years that followed. But as the Post points out, while Citi’s stock has kept up with many of its peers over the past year, it has lost 91 percent of its value over the past five years.
The timing of Pandit’s departure attracted immediate criticism, Forbes.com noted, adding that it came only 24 hours after the company reported third quarter financial results. “Such an event already attracts large media attention, and it would have made sense for Citi to announce a succession plan then,” the magazine continued. Several other sources are reporting that Pandit’s resignation was a result of clashes with Citigroup’s board.
In the past year, Pandit has endured a “shareholder revolt over executive pay, a rejection by the Federal Reserve of a plan to buy back more stock and an arbitration decision over the value of a brokerage joint venture with Morgan Stanley that forced Citigroup to take a $2.9 billion write-down,” the Wall Street Journal reported.
The NY Times said the banking giant’s powerful chairman, Michael E. O’Neill, was privately huddling with other board members to plan how to replace him, according to several people briefed on the talks, just weeks prior to Pandit’s resignation.
Michael Corbat, who has been with Citi since 1983 and was serving as the CEO of its Europe, Middle East and Africa division, will replace Pandit. The Post added that Corbat has commercial experience, while Pandit’s background was largely in investment banking. Corbat had moved to London in January 2012 and was expected to stay indefinitely. WSJ reported that his staff in London was blindsided by the announcement and that “some executives emerged from a meeting and read the news on their computers and Bloomberg terminals, well before the bank’s internal memo was released.”
Citi is currently the third-largest U.S. bank, trailing only JP Morgan Chase and Bank of America. Monday, Citigroup’s stock rose to its highest level since April after beating analyst’s third quarter expectations.