Oct. 16 - The surprise departure of Citigroup CEO Vikram Pandit and promotion of Michael Corbat leaves many questions unanswered including was Vikram pushed out, will Corbat break up the bank and will the stock recover? Conway G. Gittens reports.
Vikram Pandit's sudden exit from the corner office at Citigroup is creating far more questions than answers. Question 1 - Why now? His resignation comes one day after quarterly results show the No. 3 U.S. bank is back on track after a government bailout during the financial crisis. And Question 2 - Was it his idea or the board's? Basically, Pandit says it's better to go out on a high note, according to Reuters Breakingviews editor Rob Cox, who spoke to Pandit after the news broke. SOUNDBITE: ROB COX, U.S. EDITOR, REUTERS BREAKINGVIEWS (ENGLISH) SAYING: "He said he wouldn't do this, he wouldn't have resigned or asked to leave yesterday if he didn't believe the bank was on strong footing and had a good succession plan in place." Question 3 - Will new CEO Michael Corbat break up the big bank? REPORTER STAND-UP: CONWAY G. GITTENS, REUTERS (ENGLISH) SAYING: Here's a clue. When Citigroup was in legal trouble Chuck Prince, a lawyer took over as CEO. Pandit, a risk manager, lead the company out of the financial crisis. And now Corbat, who is called Mr. Fix It is taking over as the bank repairs itself. S&P Capital IQ Analyst Erik Oja says here's what Corbat should do first: SOUNDBITE: ERIK OJA, BANKING EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "Keep cutting down the Citi Holdings legacy assets and get the balance sheet to something that they can get their arms around. And number two: return of capital to shareholders." Some analysts say with Pandit out - Corbat will focus on more than just managing risk, but also on growing commercial lending around the world. And that's good for shareholders. The stock has basically been dead money since Pandit took over in December 2007. Oja is maintaining his "buy" rating. SOUNDBITE: ERIK OJA, BANKING EQUITY ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "They are improving their profit margins. Their capital levels of better than peers and if you are interested in having international exposure, international lending - Citigroup is the vehicle by which to do it. And we think that shares are attractive on earnings and book value." Wall Street is holding out for more answers - with the stock barely moving on the big shake-up. Conway Gittens, Reuters