Another loan could cost Pandit job
India-born Vikram Pandit could well lose his job as the chief executive of Citigroup if the American government comes in with yet another lifeline for the beleaguered financial services entity.business Updated: Feb 23, 2009 23:20 IST
India-born Vikram Pandit could well lose his job as the chief executive of Citigroup if the American government comes in with yet another lifeline for the beleaguered financial services entity. Citi has already received fresh capital injection to the tune of $45 billion from the US government and officials way back in November reportedly had even discussed the option of replacing Pandit.
Pandit took over the reins of Citi in December 2007.
"Top government officials warned Pandit that a third trip to the taxpayer trough would probably cost him his job," the Wall Street Journal reported on Monday.
The report noted that in November last year Federal officials privately discussed replacing Pandit. "But the government decided not to remove him, in large part due to a dearth of qualified replacements," it said.
The Bank is in talks that could see the US government take a bigger stake, a source said, sparking a recovery in the battered share price of what was once the country's most valuable bank.
The Journal said taxpayers could own as much as 40 per cent of the ailing lender's common stock. But the Journal said Citigroup executives hope discussions with US officials will result in a government stake closer to 25 per cent.
The administration of President Barack Obama has not indicated whether it supports the plan, the report said.
Citi is discussing with US officials a scenario under which a substantial portion of the $45 billion in preferred shares held by the US government, amounting to a 7.8 per cent stake in Citigroup, would convert into common stock, the Journal reported.
The plan would not cost further taxpayer money, but other Citi shareholders would see their stakes diluted and the government would have much larger influence over Citi.
The New York Times reported on its website that the plan being contemplated at Citi could pave the way for similar moves at other big banks.
Citi declined comment.