(Bloomberg News) Citigroup Inc. Chief Executive Officer Vikram Pandit, who led the bank through a U.S. bailout while reaping $261 million for himself, was replaced by Michael Corbat a day after reporting a surprise quarterly profit.
President and Chief Operating Officer John P. Havens, 56, also resigned, the New York-based bank said today in a statement. Corbat, who led Citigroup in Europe, the Middle East and Africa, takes the helm immediately as Pandit, 55, leaves both his executive role and his seat on the board, according to the statement.
The departures remove a leadership team that navigated Citigroup through 2008's global credit crisis, when taxpayers rescued the bank from collapse with a $45 billion bailout. While Pandit repaid the U.S., he's been challenged this year as regulators rejected his plan to boost payouts to investors and shareholders voted against his pay package.
"Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm," Pandit said in the statement. "Mike is the right person to tackle the difficult challenges ahead."
Shares of New York-based Citigroup, the third-largest U.S. bank, rose 0.1 percent to $36.71 as of 9:32 a.m. in New York. While the stock had gained 39 percent this year through yesterday, it remains down about 90 percent since Pandit was publicly named as CEO in December 2007 when losses tied to the brewing financial crisis drove out his predecessor, Charles O. "Chuck" Prince.
'Unprecedented' Change
Pandit's departure will help the company, said Sheila Bair, who clashed with him when she was chairman of the Federal Deposit Insurance Corp.
"This was a very positive move," Bair said today in an interview with Tom Keene on Bloomberg Radio. "I did have concerns about Mr. Pandit's qualifications to serve as the CEO of the largest commercial bank, because he had never been a commercial banker."
Corbat, 52, has worked at Citigroup and predecessor companies since graduating from Harvard in 1983, according to today's statement. He was previously CEO of Citigroup's Europe, Middle East and Africa operations, overseeing consumer banking, corporate and investment banking and trading in that region. Before that, he was CEO of Citi Holdings, where he oversaw the divestiture of more than 40 businesses.
'True Believer'
In a memo to the staff, Corbat said he's "a true believer in this company" after spending his entire career at Citigroup. He'll spend the next few weeks reviewing reporting structures, which he said will result in unspecified changes.
"The international business is where they live and die, so hopefully this fellow, because of his background, is going to be able to focus on that and retain that and then develop a model for the future," said Chris Whalen, a senior managing director at Tangent Capital Partners LLC, on Bloomberg Television. The management change "is very disorderly and I think they need to explain to us why this timing made sense from the board's perspective."
If no alterations are made to Pandit's compensation package, Citigroup will have paid him about $261 million in the five years since he became CEO, including his personal compensation and about $165 million for buying his Old Lane Partners LP hedge fund in 2007 in a deal that led to his becoming CEO. The bank shut Old Lane soon after Pandit took the post, causing a $202 million writedown.