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Vikram Pandit to Step Down as Citigroup’s Chief Executive

Vikram Pandit (l.) & Michael Corbat (r.)
Source: Cindy Ord | Getty Images
Vikram Pandit (l.) & Michael Corbat (r.)

Citigroup tapped Michael Corbat as its new CEO Tuesday after Vikram Pandit stunned Wall Street by stepping down from the helm of the banking giant.

The shock change at the top of the bank came just one day after Citigroup posted surprisingly strong quarterly results. (Read: Pandit's Departing Memo to Employees )

There were reports, however, that Pandit had been clashing with the board over strategy and performance. The Wall Street Journal said the board was frustrated with the performance of the institutional clients unit, among other issues.

"A high-level person told me he was forced out last night, " said CNBC stock commentator Jim Cramer. (Read More: Pandit's Sudden Exit: What Really Happened?)

Pandit, however, denied that he was forced out, telling CNBC that "it was my decision." (Read More from Pandit Interview )

Pandit also resigned from the bank's board of directors, effectively immediately. President and Chief Operating Officer John Havens resigned as well.

Corbat was formerly the chief executive of Citi's Europe, Middle East, and Africa division. (Read More: Meet Citigroup's New Boss .)

Pandit's resignation caught industry watchers by surprise. CNBC has learned that officials at the Treasury Department were also unaware that a change in Citi leadership was imminent.

"This is a complete shock. No one expected this whatsoever, " said Cramer, host of CNBC's "Mad Money."

After falling sharply in pre-market trading, shares of Citigroup rose in early trading.

Wall Street, meanwhile, was surprised that Pandit would be pushed out now after keeping the bank afloat during the financial crisis and getting it back on a firmer footing.

"The divisions were all in very good shape, " Cramer said. "I don't even want for a second to tell people that there was anything in the works to make this happen. There was nothing…this was the quarter where you give him a big raise, he was under a lot of pressure but he got this right."

Still, Pandit's resignation comes after a series of high-profile defeats this year.

In March the Federal Reserve rejected the bank's capital plans after a stress test; Pandit had led analysts and investors to believe the dividend-raising plans would be approved.

Last month, Pandit agreed to a low sale price for his bank's stake in the brokerage operated by Morgan Stanley. Citigroup had to take a $4.7 billion charge in the third quarter to write down the value of that stake.

In 2007, Pandit succeeded Charles Prince, after the bank racked up losses relating to mortgage-backed securities .

On Monday, Citigroup reported quarterly earnings that beat analysts' expectations. The bank reported third-quarter earnings, excluding items, of $1.06 per share, down from $1.23 a share in the year-earlier period.

Revenue fell, however, to $19.4 billion from $20.83 billion a year earlier.

The one-two punch of the results and then Pandit's exit point to what analysts say has been a years-long unsettled atmosphere around the bank.

"What Pandit and Havens did was increase the uncertainty around Citi, '' said Matt McCormick, banking analyst and portfolio manager at Bahl & Gaynor in Cincinnati, Ohio. "There's a perpetual cloud of uncertainty surrounding Citigroup. There's always turmoil ... that's had to affect the stock price.''

Pandit's resignation revived questions that were asked from the day he took the job: whether he had the right experience to lead Citigroup in the first place.

Born in Nagpur, India, the 55-year-old Pandit obtained two electrical engineering degrees and a doctorate in finance from Columbia University.

He joined Citigroup in July 2007 when the bank acquired his hedge fund and private equity firm, Old Lane Partners LP, for $800 million.

Citigroup had to shut down Old Lane the next summer, an early black mark for the executive.

Critics later charged that Pandit was too timid, perhaps even too academic, to run a big consumer bank.

"He was not beloved by Wall Street. He was thrust into that position—he's a hedge fund guy, '' McCormick said.

His successor, Corbat, has held a number of senior roles at Citigroup, including running Citi Holdings, the unit established to house businesses and assets the company wants to shed.

A fixed income salesman by training, Corbat started out at Solomon Brothers in 1983.

More recently, he has been credited with successfully restructuring some of Citigroup's consumer and credit card units.

—Reuters contributed to this report.

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