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Abrupt shake-up at Citigroup

Secrecy shrouds exit of CEO and COO; Wall Street dubious

Pandit
Corbat
Associated Press
One day after Citigroup reported earnings that beat analysts’ expectations, CEO Vikram Pandit announced his resignation.

Vikram Pandit, who steered Citigroup through the 2008 financial crisis and the choppy years that followed, abruptly left the bank on Tuesday, stepping down as CEO and as a director.

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 was also CEO of Citi’s Institutional Client Group, which serves global companies, banks and governments.

Pandit was replaced immediately by Michael Corbat, 52, a Citigroup lifer who had been CEO of its Europe, Middle East and Africa division. Corbat joined the bank in 1983, just after graduating from Harvard.

The Wall Street Journal reported the departures followed a clash between Pandit and the company’s board over strategy and business performance, including at the group run by Havens.

In a conference call late Tuesday with financial analysts and reporters, Corbat and Citigroup chairman Michael O’Neill remained vague about the sudden change.

“What happened is that Vikram submitted his resignation and we accepted it,” O’Neill said more than once. Corbat said the changes do not reflect any desire to change Citigroup’s strategic direction.

Analysts are skeptical. Pandit’s departure from the board is a clear indication that “this was a complete and unexpected break” between Pandit, 55, 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.”

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