Why Vikram Pandit exited Citi?
Citi CEO Pandit stepped down after strong disagreement with the board. That was a surprise to many outsiders and insiders that he along with his senior lieutenant picked a time that Citi had seemingly stabilized and turned around. However, it may be the best outcome for everyone that should come early than later.
Pandit took over the post when Citi was thought almost down the pipe. He had been in charge of Morgan Stanley's investment banking arm. He supported electronic trading and encouraged quantitative analysis. Some of his previous subordinates now have become big name hedge fund managers specializing on quantitative trading, e.g., Peter Muller at PDT hedge fund. Pandit himself became a Citi citizen when his co-founded hedge fund was acquired by Citi. He holds a B.S. and M.S. degree in Electrical Engineering from Columbia University, and an M.B.A. and Ph.D in Finance from Columbia Business School. Some said he is too brainy to run a giant bank. What this refers to is his experience is too academic to run such a big bank.
His co-founded 2006 hedge fund, Old Lane didn't go well after Pandit took the top job. Mr. Pandit was named Citigroup’s chief in late 2007, but the hedge fund continued to underperform. After making a paltry 3 percent return in 2007, Old Lane began to lose money in 2008. Investors, in need of cash, asked for billions back from the fund. Unable to keep the firm afloat, the bank decided to close the hedge fund in the summer of 2008.
This background is the main attacking point to Pandit. Compared to BofA's seemingly endless cuts to please investors, Citi did little in core banking business other than enforcing their trading and wealth management business. Indeed there have been troubles for Citi; failed pressure test to raise dividend, and Pandit's pay vote by shareholders. But none of these is comparable to Pandit's strong opponents in regulatory bodies. Sheila Bair of FIDC openly said that Citigroup has lacked "a clear strategic direction and focus" under Pandit in a CNBC interview, and said shareholders have been unhappy. Bair wanted the government to fire Pandit after the taxpayer bailouts and government guarantees. Geithner disagreed, and Pandit kept his job. This time Pandit eventually thinks his mission is complete and decides to step down.
Under the new CEO, Citi is assumed to be focusing on better balance sheets and shareholder satisfaction, i.e., dividend increase. Hence the market welcome the change with shock. On the other hand, there is no doubt that Pandit can find another top job, maybe in hedge funds. Have managed banks in Citi's size is a unique experience for any. The government is happy to get this big bank on their track too. So this is a win-win-win outcome.
Pandit took over the post when Citi was thought almost down the pipe. He had been in charge of Morgan Stanley's investment banking arm. He supported electronic trading and encouraged quantitative analysis. Some of his previous subordinates now have become big name hedge fund managers specializing on quantitative trading, e.g., Peter Muller at PDT hedge fund. Pandit himself became a Citi citizen when his co-founded hedge fund was acquired by Citi. He holds a B.S. and M.S. degree in Electrical Engineering from Columbia University, and an M.B.A. and Ph.D in Finance from Columbia Business School. Some said he is too brainy to run a giant bank. What this refers to is his experience is too academic to run such a big bank.
His co-founded 2006 hedge fund, Old Lane didn't go well after Pandit took the top job. Mr. Pandit was named Citigroup’s chief in late 2007, but the hedge fund continued to underperform. After making a paltry 3 percent return in 2007, Old Lane began to lose money in 2008. Investors, in need of cash, asked for billions back from the fund. Unable to keep the firm afloat, the bank decided to close the hedge fund in the summer of 2008.
This background is the main attacking point to Pandit. Compared to BofA's seemingly endless cuts to please investors, Citi did little in core banking business other than enforcing their trading and wealth management business. Indeed there have been troubles for Citi; failed pressure test to raise dividend, and Pandit's pay vote by shareholders. But none of these is comparable to Pandit's strong opponents in regulatory bodies. Sheila Bair of FIDC openly said that Citigroup has lacked "a clear strategic direction and focus" under Pandit in a CNBC interview, and said shareholders have been unhappy. Bair wanted the government to fire Pandit after the taxpayer bailouts and government guarantees. Geithner disagreed, and Pandit kept his job. This time Pandit eventually thinks his mission is complete and decides to step down.
Under the new CEO, Citi is assumed to be focusing on better balance sheets and shareholder satisfaction, i.e., dividend increase. Hence the market welcome the change with shock. On the other hand, there is no doubt that Pandit can find another top job, maybe in hedge funds. Have managed banks in Citi's size is a unique experience for any. The government is happy to get this big bank on their track too. So this is a win-win-win outcome.
posted by Intl.investment.services at
2:44 PM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home