Sources inside Citi told CNBC that Pandit "is acting" as if he has the CEO job, though they may name someone else as chairman. Possible candidates include the current chairman, Robert Rubin, or Bob Willumstad, current chairman of AIG.
Investors will be demanding fast results from whoever is named CEO. He will have to decide on how to cut costs--managers have already been asked to come up with headcount reductions --and the future direction of the firm. That would include the question of whether Citi breaks up or remains a financial supermarket.
Pandit worked at the brokerage Morgan Stanley for about 11 years until 2005, when he and some Morgan Stanley colleagues quit and later founded the hedge fund Old Lane Partners. Earlier this year, Citigroup bought Old Lane for $800 million and put Pandit in charge of Citi's alternative investments.
Then, after Citi warned in October of multi-billion-dollar losses during the third quarter due to bad bets on subprime mortgages, Pandit was promoted to lead a unit that combined the markets and banking segment with alternative investments.