In a surprise move that came one day after better-than-expected financial results were reported, New York-based Citigroup has announced the resignation of Vikram Pandit as the company's CEO and as a member of the Board, effective immediately. The Board also announced it unanimously elected Michael Corbat CEO and a director of the Board. Corbat previously served as Citigroup's CEO of Europe, Middle East and Africa.
Additionally, in a move that may have implications for Citigroup's operations and technology strategies, the Company announced the resignation of President and Chief Operating Officer, John P. Havens, who also served as CEO of Citi's Institutional Clients Group. According to a Citigroup press release, Havens said he had already been planning retirement from Citi at year-end but decided, in light of Pandit's resignation, to leave at this time.
The Wall Street Journal is reporting that Pandit "abruptly stepped down following a clash with the New York company's board over strategy and operating performance at businesses including its institutional clients group, according to people with knowledge of the bank."
Pandit assumed the CEO role in 2008, following the unsuccessful tenure of Charles Prince and taking the reins just as the global financial crisis was occurring. Although there were doubts within the industry about his qualifications for the job, Citigroup eventually returned to profitability two years ago. The company reported stronger-than-expected third-quarter earnings on Monday. Excluding a number of onetime charges Citigroup earned $3.27 billion, or $1.06 a share, which was better than analyst estimates of 96 cents a share.
Under Pandit the company also has taken a leadership role in developing some of the leading-edge technologies that are reshaping delivery, services and transactions, including mobile and social media.
[Read Citi Global Enterprise Payments managing director, digital money services, Gary Greenwald's views on the Wild Ride Ahead As Banks Tackle Mobile Payments and Digital Initiatives.]
In the company press release, Pandit stated:
Thanks to the dedication and sacrifice of people across Citigroup, we have emerged from the financial crisis as a strong institution. Citigroup is well-positioned for continued profitability and growth, having refocused the franchise on the basics of banking. Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup. I could not be leaving the Company in better hands. Mike is the right person to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this Company. I will truly miss the wonderful people throughout this organization. But I know that together with Mike they will continue to build on the progress we have made."
According to Michael E. O'Neill, Chairman of the Citigroup Board of Directors: "We respect Vikram's decision. Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the Company, strengthened our global franchise and re-focused the business."
Regarding Michael Corbat's promotion to CEO, O'Neill stated:
"Mike Corbat has demonstrated outstanding leadership qualities and the ability to sharpen our focus on achieving strong, sustained operating performance. From his nearly three decades at the Company he brings deep and varied operating experience across a broad spectrum of the financial services industry. He has managed numerous institutional businesses, including sales and trading, capital markets, corporate and commercial banking, and such consumer businesses as wealth management, mortgages and credit cards. During the financial crisis, he successfully led the divestiture of more than 40 businesses, helping to strengthen the Company's balance sheet substantially. In this role, he also restructured and rebuilt a number of the Company's consumer-facing businesses, including the mortgage and credit card businesses."
Alluding to Havens' role in the bank's operations, O'Neill said, "In the last two years he has successfully taken on the additional role of overseeing Citigroup's operations, where he drove significant improvement and streamlining."
In the company press release, Corbat expressed optimism about Citigroup's prospects, while hinting there could be further streamlining, noting:
Given the considerable progress we have made in recent years, Citigroup possesses unique strengths to take on exciting opportunities around the world. With unprecedented economic, regulatory and political change, my top priority is to keep us focused on what our clients need, both today and tomorrow. The Board and I firmly believe in Citigroup's future, and together are committed to delivering sustained profitability and shareholder returns. The fundamentals we have in place today are solid, and we are on the right path. In this dynamic market environment, however, we must efficiently allocate our resources and offer the products with the highest potential in the most productive markets. Citi's businesses, footprint and talent are unmatched, and we will be relentless in our drive toward operating excellence and risk management. I look forward to working with our talented management team and dedicated employees to chart that future course."