Vikram Pandit has been the CEO of Citigroup (C) for ten months. The only thing he has done right is collect $216 million in compensation. Much of that was for the sale of his company Old Lane Partners to the big bank. In June, Old Lane was closed.
Today, Pandit lost out on his purchase of Wachovia (WB). While he was busy elsewhere, Wells Fargo (WFC) stepped in and robbed him.
As Reuters says, "Pandit, who hailed from the investment banking side of the business, firmly put his stamp on Citi’s retail side by taking on stricken Wachovia Corp’s banking assets and sharing the risk with the Federal Deposit Insurance Corporation."
In a matter of days, and after Citi’s stock popped up, the deal was gone. The FDIC may try to undo the Well Fargo deal, but that is far from certain.
Today, Citi is trading down over 12% to $19.62.
Pandit has made a habit of disappointing investors. According to the FT, in April Pandit, "vowed to slash the beleaguered financial group’s cost base by up to 20 percent."
So far, the cost-cutting program has not worked out.
People expected that Pandit would reshape the bank. He might have sold off the retail brokerage division, Smith Barney, to raise capital. Or, he could have put the bank’s international banking branches up for auction. That did not happen either.
Since the beginning of the year, Citi is down more than 20%. JP Morgan (JPM) is up more than 10% and Bank of America (BAC) is off slightly.
Is it any wonder? Most of what Pandit has done has hurt the bank and now his only major decision has turned out badly.
Douglas A. McIntyre