Wall Street was stunned Tuesday when Citigroup Chairman Vikram Pandit abruptly resigned from the firm after five years on the job.
Pandit told The New York Times that his decision to leave "was something that I had been thinking about for a while" and he approached Citigroup Chairman Mike O'Neill about the possibility on Monday night.
O'Neill purportedly did not persuade Pandit to stay. According to various reports, Citigroup board members, including Mr. O'Neill, had become increasingly disenchanted and frustrated with Pandit and had been contemplating a replacement before Pandit's official announcement.
William Cohan, author of "Power and Money: How Goldman Sachs Came to Rule the World" and a veteran Wall Street watcher, says Pandit was most likely pushed out from his the C-suite office.
"Nobody leaves these jobs voluntarily," Cohan says in an interview with The Daily Ticker. Pandit "wasn't ready to leave, he did not want to leave. This came upon him suddenly."
Pandit took the helm at Citigroup in December of 2007 and was in charge of shepherding the firm as the financial crisis rocked Wall Street. Pandit was instrumental in getting the $306 billion federal government lifeline for Citigroup, one of the largest among U.S. banks.
Citigroup's bad bets in the housing market caused it to hemorrhage billions of dollars and Pandit slashed 110,000 jobs and shed $351 billion of assets to staunch the bleeding. Citigroup returned to profitability in 2010 and the U.S. Treasury sold its remaining stake in the firm for $10.5 billion in late 2010.
Pandit's tenure at Citigroup was far from charmed. Citigroup shareholders rejected his $15 million pay package in April and board members grew increasingly anxious over the poor performance of Citigroup's stock price, which has dropped 90% since Pandit became CEO.
On Monday, Citigroup reported that its third-quarter net income was $468 million or 15 cents a share compared to net income of $3.8 billion or $1.23 a share in the same quarter last year.
Pandit was replaced by Michael Corbat, a longtime investment banker who has worked for Citigroup for three decades, most recently as the head of the firm's international business. So what's next for the bank?
Cohan says Corbat's mission will continue to grow Citigroup's global presence, especially in important markets like North Africa and the Middle East. The transition from Pandit to Corbat was not "elegant" Cohan notes but a necessary move by Citi's top leadership.
"Pandit inherited a huge mess" and was "a good caretaker for Citigroup" during a difficult time, Cohan says. But "if a board loses confidence in a CEO it has to be like a band-aid, just rip it off and move on."
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