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Can Pandit handle it (and should you steer clear of Citi if not)?

If Meredith Whitney’s right, Citi’s going to the dogs no matter how hard Vikram Pandit tries to bed it down amongst the roses.

Whitney says Pandit faces an “impossible feat” in turning Citi around. The associated costs, according to Whitney, are simply too “seismic” and the revenue streams too feeble.

From the Whitney perspective, Pandit’s decision to divest $400bn of non-core assets and cut 9,000 jobs makes no difference. She predicts the associated restructuring costs will be prohibitively expensive and that profits (and therefore bonuses) will be minimal for the next three to five years.

To make matters worse, questions are being raised about Pandit’s stewardship of the big bank.

Why, for instance, has he placed an ex-head of Morgan Stanley’s equities business in charge of everything from investment banking, fixed income, corporate banking and alternative asset management at Citigroup, despite a manifest lack of broad organisational experience?

If Pandit fails, Citi will not be a pretty sight. Is now the time to take evasive action and send your CV elsewhere? Alternatively, put the pro-Pandit case below.

Comments (11)

  1. Silly question. Of course Pandit’s not up to it. The biggest thing he ever managed previously was a hedge fund, which hardly leaves him well placed to manage an investment bank, a retail bank, an asset manager and God knows what else. All he’s done so far is bring in a few cronies (John Havens Brian Leach), and produce this restructuring plan, which would be cripplingly expensive.

  2. it took years to get rid of chuck prince, and i hope it doesn’t take a decade to put a proper CEO in place. Pandit is way out his league on this one. Citi will fall like humpty dumpty and pandit will walk away with millions redundancy pay

  3. Consumer banking is Pandit’s weak spot. He might just about be able to get a handle on the investment bank, but how’s a guy from a hedge fund going to run a huge consumer banking operation? Hence, I suspect, the decision to get rid of part of it.

  4. Pundit, strikes me you know nothing about Citigroup and should keep your opinions to yourself. If you did know, you might be aware that Pandit has brought in Terri Dial, former Wells Fargo banker, so sort out the consumer business.

  5. We lack a powerful hero like Sandy Will at this time. Citi’s fate is sold, as same as BellStern.

    Pandit defender Reply
  6. If you could see the quality of staff at Citi, you would start thinking that a complete closure of the Bank is really the best option.

    Mark Fotheringill Reply
  7. It’s all true. I’m just holding out for sweet redundancy. Easiest cost cutting measure? Fire anyone with ‘global’ or ‘head’ in their job title. This will leave only people with actual definable function e.g. keep lawyers 1-5 , fire Global Co Head of EMEA Development Strategy. And fire anyone who sends a congratualatory email to the who building welcoming someone to the team.

    President Bongo Reply
  8. Pandit has been handed a poison chalice. Citigroup needs more capital, but whose going to buy those assets Pandit wants to sell for a reasonable amount in this environment? Add this with to fact that the back office systems are interlinked and overheads are combined and you have huge restructuring costs and deep deep do do.

  9. V.P. made a top impression at Morgan Stanley, very intelligent, thoughtful and visionary. What is worrisome? A lot of senior managers at MS were incapable. Top management was asleep at the wheel, dreaming of politics and empire building, while Morgan Stanley Investment Management leaders in NY and London were complete failures. Just look at GSAM in comparison.You have to wonder whether V.P. is also long on sales, but short real management ability. There are too many investment banks already. Perhaps V.P. can put Citi out of its misery…….

  10. I know at there is going to be another 2 sets of redundancies announced in the coming 6 months. The big question at Citi and in the market is how did GS & JP Morgan not get hit by the Credit Crunch? simple their risk management sat down last March reviewed the protfolio’s and decided that they were not going to continue to invest in the Credit market!! seems simple to me!!!

  11. Hmm. This is a daunting task. Revitalize a bank which has a capital structure of no equity and all debt. How does one create equity overnight? How does one create consumer demand? He can’t grow consumer demand when demand has been muted by debt can he? If consumer demand isn’t coming back anytime soon there won’t be much economic growth…the political forces just plain spent America’s wealth like frivolous idiots.

    It takes 30 years to pay off a mortgage. Political forces that separated themselves from the Christian belief system and substituted “secularism” instead–the end result of which is catastrophe and collapse of economic system. It took 250 years to build the greatest country in the world under WASP leadership and 40 years to spend the wealth on foreign expeditions and HUD.

    The fundamental changes have to be made in people’s expectations and the demands it places on government.

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