Vikram Pandit abruptly severed his ties with Citigroup on Tuesday, stepping down as CEO and a director, after steering the bank through the 2008 financial crisis and the choppy years that followed.
The move shocked Wall Street and Citigroup offered no explanation. There had been no hint of the departure Monday, when the bank discussed its strong third-quarter earnings in lengthy calls with analysts and reporters.
A second top executive resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also served as CEO of Citi’s Institutional Client Group.
Pandit’s replacement, effective immediately, is Michael Corbat, a Citigroup lifer who had been CEO of its Europe, Middle East and Africa division, the bank said. Corbat joined the bank in 1983, just after graduating from Harvard.
The departures followed a clash with the company’s board over strategy and performance at some businesses, including the institutional clients group that was run by Havens, The Wall Street Journal reported.
Pandit’s departure from the board is a clear indication that “this was a complete and unexpected break” between Pandit and Citi directors, said Chris Whalen, a bank analyst and senior managing director of Tangent Capital Partners in New York.
“This shows how dysfunctional this organization is, to have this event unfold this way,” Whalen said. “They should have told us yesterday, unless they didn’t know.”
Still, Whalen said he does not expect the changes to mark a shift in strategic direction for the bank.
“They needed new leadership to put a new face on it,” he said.
If Pandit’s disagreements with the board were new, his differences with shareholders had been brewing for far longer. They rejected his 2011 pay package in a non-binding vote this spring. Many were frustrated by his failure to boost Citigroup’s share price.
Yet on Monday, Citigroup’s stock rose to its highest level since April after the bank said it beat analysts’ expectations in the third quarter. In an analyst call that lasted an hour and 40 minutes, and a shorter call with reporters, no one asked bank executives how long Pandit planned to stay, or whether there was a succession plan in place.
Today, Citi is the country’s third-largest bank, with $1.9 trillion in assets, according to the Federal Reserve. It trails only JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.
About the Author