The sudden rise of Vikram Pandit to be chief executive at Citi, the biggest job in global banking, almost beggars belief. He is an excellent man but he is taking on an extraordinarily tough job – one for which it is not clear that he is properly qualified – at a very difficult time.
Euromoney first encountered Pandit in the early 1990s when he was running the equity markets division of Morgan Stanley. Bright, engaging and friendly, Pandit was a respected and popular figure whose colleagues back then wondered whether he might head Morgan Stanley one day.
It never quite happened. And after 22 years in various roles running institutional securities businesses at the firm, he lost out in the political battles in the awful last days of the Purcell regime, quitting when rival Zoe Cruz was promoted over him. It seemed one of myriad Wall Street careers if not exactly petering out, then gently winding down in familiar and comfortable fashion: having risen high in investment banking and earned a lot of money, Pandit founded a hedge fund.
Citi bought his fund out in the middle of 2007. Pandit briefly ran alternative investments. Then, as the credit crisis gripped and senior Citi managers were lined up and sacrificed, he ran the global markets divisions of the huge bank. Now he is suddenly CEO.
Robert Rubin, who led the search for a new chief executive, said that the bank spoke to quite a few people but at the end came back to Pandit as the candidate he always thought they would turn to.
It doesn’t sound terribly convincing. A major question nags: did Pandit get the job only because they couldn’t sell it to a more experienced big name who had actually run a large global bank? Is it the job no one else wanted?
Perhaps it is not surprising that the likes of Josef Ackermann and Fred Goodwin apparently ruled themselves out of the running for the Citi post. Taking the job could be a double-edged sword: the new CEO takes over the world’s largest financial institution, but the main task could well be to split Citi up – so you take away the exalted position you took over.
Even for a man as intelligent and hard-working as Pandit – and Rubin offers the description of “genius” – coming in as an outsider, with no great insights into the huge bank, at a moment of crisis and with no experience running a large public company, is astonishingly tough. Rubin himself, who had previously risen higher than Pandit and run Goldman Sachs, says that when he arrived at Citi in 1999, with no responsibility for running any part of it and complete freedom to wander around with his yellow pad meeting its top executives, it took him the best part of a year to gain even a rudimentary understanding of Citi and its various businesses.
Pandit doesn’t have a year: days and hours count. His time is as precious and as stretched as the bank’s dwindling capital base. He had to discuss with the board of directors of Citigroup his thoughts on the consumer banking business, one he has never run or worked in, on his first day as CEO. Apparently he ventured that there might be a lot to be done there in cost saving. One can’t imagine that went down well with the ranks who have watched the investment bankers’ bets on CDOs bring Citi low.
The good news is that Pandit, as an outsider, can bring objective and dispassionate analysis to the company’s agglomeration of businesses. He will then have plenty of opportunity to prove his capacity to execute on the strategic decisions that emerge. His decision on the second day as CEO to reverse the previous policy of minimizing responsibility for advised SIVs and instead to take assets on balance sheet marked a bold and welcome refusal to go along with any remaining pretence and complacency over the bank’s true exposures.
