Citi board keeps faith in Vikram Pandit
Citigroup's board isn't losing faith in its Indian-American Chief Executive Vikram Pandit even as it is expected to report fourth quarter losses that are billions of dollars greater than previously anticipated.india Updated: Jan 13, 2009 11:52 IST
Citigroup's board isn't losing faith in its Indian-American Chief Executive Vikram Pandit even as it is expected to report fourth quarter losses that are billions of dollars greater than previously anticipated, according to media reports.
"We have confidence in the current management and leadership of Vikram," the banking giant's lead independent director Richard Parsons, a former CEO of Time Warner Inc, was quoted as saying in an interview by the Wall Street Journal.
"There's no truth" to rumours that Pandit's job is in jeopardy barely a year after he took over the reins, he added.
Parsons is expected to be named Citigroup's chairman this month, replacing Sir Win Bischoff, the leading financial daily said citing people familiar with the matter.
The New York Times too reported on Monday that Parsons has emerged as the leading candidate to succeed Bischoff as Citigroup's chairman.
Federal banking regulators are pressing Citigroup to shake up its board and replace Bischoff in an effort to restore confidence in the bank, the influential daily said. While the timing was uncertain, the change could come as early as this week.
Regulators are growing increasingly concerned that Citigroup's board is struggling to regain investors' trust after the company was compelled to seek not one but two financial lifelines from Washington.
The issue gained new urgency Friday when Citigroup, under pressure from regulators, took a step toward breaking itself apart with a plan to spin off Smith Barney into a joint venture with Morgan Stanley, the Times said.
That news coincided with an announcement that Robert E Rubin, the former treasury secretary and an influential Citigroup director, would resign.
Given the turmoil at Citigroup, many analysts and even some Citigroup insiders wonder whether Pandit can hold on to his job. While Citigroup insists that Pandit has the full backing of the board, some members have privately expressed some frustration with his leadership, it said.
The bank's regulators expressed measured confidence that Pandit and his team could succeed, according to people briefed on the situation, and Pandit's position appears secure for now, the Times said.
"There is no current movement afoot to change executive management," Parsons was quoted as saying in an interview. "We have a lot of confidence in Vikram. He is extremely able and the clear leader of the current management team working with him."
Since late November, when Citigroup received its first multi-billion dollar federal rescue, Pandit has come under growing pressure to streamline the company's unwieldy structure and overhaul its board.
Pandit inherited the problems at Citigroup when he became chief executive in December 2007. Since then, he has improved the bank's risk management practices and reorganised the company. His supporters say the plan for Smith Barney is evidence that he understands those actions are not enough, the Times said.
Even so, some question whether Pandit can retain the backing of Citigroup's board, given his outspoken endorsement of the strategy to keep the company intact.
After Rubin's resignation on Friday, Wall Street talk was that Citigroup directors were putting out feelers to find a replacement for Pandit, claims that senior Citigroup executives and board members vigorously deny, the daily said.
Parsons said there was "no truth" that the board had considered or spoken with potential successors and he said it had no immediate plans to replace Pandit.
But as lead director, he has been increasing his involvement in Citigroup's affairs. Recently, he has met privately with several of the bank's top executives for lengthy discussions about their businesses and, in some cases, Pandit's management style, the Times said citing people who have met with him.
First Published: Jan 13, 2009 11:49 IST