Opinion

At last, Citi’s board takes over

By Roy C. Smith, Kenneth G. Langone Professor of Entrepreneurship and Finance and Professor of Management Practice
In a normal bank, a CEO transition is announced in advance, the board forms a search committee and the incumbent stays on until a replacement is found.

On Tuesday, the Citigroup board, chaired by Michael O’Neill, announced the resignations – effective immediately – of chief executive Vikram Pandit and chief operating officer John Havens, a day after they had presided at a conference call announcing another round of lacklustre quarterly results.

The quarter was most affected by the sale of a further 14% interest in Morgan Stanley Smith Barney at a surprisingly low valuation that required a $4.7bn pre-tax write off. This was unpleasant, but not unexpected. 

Pandit’s main contribution to Citigroup is its strategy to divide into two businesses – Citicorp, a global bank, and Citi Holdings, a junk yard of misbegotten investments – and to liquidate the latter as soon as possible. Five years later, Citi Holdings still accounted for 9% of the Citigroup balance sheet, but $3.6bn in losses.

Read full article as published in Financial News.