Jim Cramer: What Just Happened at Citi?

Jim Cramer: What Just Happened at Citi?

Was the board about to fire Vikram Pandit or did Vikram Pandit leave of his own accord? Jim Cramer has takes a hard look at the stunning developments at Citigroup .

The beleaguered bank had many critics over the past few years and, admittedly, the Mad Money host was certainly among their ranks.

In fact, Cramer placed former CEO Vikram Pandit on the Mad Money 'Wall of Shame' during Citi's long slide lower with Cramer arguing that Pandit wasn't acting fast enough to fix the balance sheet and develop a strategy to get out from under the thumb of the U.S. government.

However, when the stock traded $2, Cramer spent a lot of time with the Citigroup team and saw the genesis of a turnaround coming together.

"I saw a strategy developing that could bring the bank out of its morass, one that emphasized emerging markets and international growth while simultaneously getting control over the $100s of billions in bad loans that the company had made during the boom of the late 2000s, again not under Pandit's watch."

Cramer added that the environment in which Pandit found himself wasn't easy or friendly.

"Pandit had to report to a host of regulators, especially an extremely hostile FDIC head, Sheila Bair, and he had to deal with a surprising slowdown in the very markets he'd set his sights for, the developing markets. He also had to preside over the undoing of a huge U.S. government stake courtesy TARP, a stake that ultimately made the United States $12 billion on its investment, something that couldn't have occurred if Pandit were a horrendous operator, " Cramer said.

Then, on Monday, it seemed as if Citi's fortunes had finally turned a corner.

Citigroup beat Wall Street expectations with the bank's latest quarterly report showing it earned $1.06 per share, beating the 96 cents predicted by analysts. Citi's revenue, after special charges, was $19.4 billion, well above expectations of $18 billion.

"So, it was a little jarring, to say the least to find out that Pandit was out as CEO the morning after that universally acclaimed report, " said Cramer.

What happened?

The Mad Money host always has his ear to the ground.

"Pandit's out telling people that he was done, and he wanted it this way. The company? They aren't saying that at all. They are saying that Pandit got them as far as he could possibly take them and now it was time for a change, to a seasoned pro, Michael Corbat, who can better negotiate the governmental thicket that's standing in the way of a higher stock price."

What's the truth?

"I think that Pandit finally got the bank to the promised land of good earnings and revenue growth but that the bank wanted someone new to be able to tell the regulators and the shareholders, look, we hear you, we know your frustration with us, " said Jim Cramer.

"The ironic thing? The frustration was finally over. Pandit had succeeded at last. But the die had apparently been cast and he was no longer the board's man in the room."

What's it mean for shareholders?

"Pandit gave Corbat a real good hand, and now you get to play it with him as he gets the government off of Citigroup's back and begins the process of returning capital to its long suffering shareholders, " said Cramer.

Call Cramer: 1-800-743-CNBC

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