Citigroup's board may have said it is standing behind CEO Vikram Pandit, but the general consensus on Wall Street is that he is running out of time.
The reason's are twofold: Pandit's sudden about-face in agreeing to shed the Smith Barney brokerage unitto Morgan Stanley , and the expected announcement of a major reorganization that will refocus Citigroup back to its core global banking business.
Pandit is thus ditching Citigroup's decade-long emphasis on being a financial supermarket, which until now he has supported.
The problem with Pandit, people on Wall Street say, is vision—or the lack of it.
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While he can't be blamed for the large losses Citi has suffered because of its bad bet on real estate debt, they say, he can be blamed for not seeing that the financial supermarket model, created by former CEO Sandy Weill, wasn't working and would probably never work.
Wall Street executives say board members are growing impatient with Pandit. And now that the Federal government is increasingly involved in Citi's operations, they will be pressuring Pandit for results.
"Pandit remains vulnerable," says one high ranking executive at a major Wall Street firm who frequently speaks with board members of various Wall Street firms. "People are questioning his vision and they don't understand this deal with Morgan Stanley."
Under the terms of the joint venture with Morgan Stanley, Citigroup will retain a 49% share of the combined brokerage operations. But over time, Morgan Stanley can purchase the entire franchise.
Pandit is essentially monetizing Smith Barney—thought to be Citigroup's crown jewel for its huge profit margins—at the bottom of the market when he could have sold the unit for much more money in 2007 and late 2006 when many analysts were calling for the breakup of Citigroup.
A spokesman for Citigroup says Pandit's job is safe and the board has affirmed his status.
Top officials at Citigroup also say it's unfair to blame Pandit for the firm's problems because he inherited the mortgage mess, and then needed to take time to evaluate the firm's operations.
He only decided to reverse course on Citi's business model in recent weeks as losses piled up, and the federal government—which has injected $45 billion to prop up Citi's balance sheet— began pressuring Pandit to get Citigroup's finances in order.