Citigroup names Pandit CEO, Bischoff chairman
Wednesday, December 12, 2007; 3:01 AM
NEW YORK (Reuters) - Citigroup Inc (C.N) named investment banking head Vikram Pandit as chief executive and acting CEO Win Bischoff as chairman on Tuesday, disappointing investors who wanted a big-name outsider to overhaul the bank.
Citi had been seeking a replacement for former CEO Charles Prince, who left on November 4 under pressure from shareholders frustrated by the performance of the largest U.S. financial services company. Citi shares have fallen by about a third this year, and the company has taken massive write-downs for mortgage-related holdings.
The appointment of Bischoff, 66, was a surprise. Formerly chairman of Citi's international businesses, Bischoff served as acting CEO for the past five weeks. Former Treasury Secretary Robert Rubin, who has served as chairman in the interim, will return to his duties as chairman of the executive committee.
Pandit's career has included heading investment banking and capital markets at Morgan Stanley (MS.N). He joined Citigroup five months ago when the bank bought his year-old hedge fund firm, Old Lane Partners, for $800 million.
But some investors expressed concern that the 50-year-old, India-born executive has never run a public company, let alone one as big and complex as Citi. Pandit also has no experience leading a consumer business, which at Citi generates more than half of overall revenue.
"There was some hope that somebody with a bigger name would be chosen, so maybe from that perspective there is some disappointment," said Lee Delaporte, research director at Dreman Value Management, which has $22 billion of assets and has sold its Citi holdings.
Citigroup made the announcement at 2:15 p.m. on Tuesday, the same time the U.S. Federal Reserve had a scheduled announcement on interest rates.
Shares of Citi fell 4.2 percent to $33.30 by the close of trading on the New York Stock Exchange. Financial stocks fell on disappointment that the Fed, which reduced its benchmark rate by 0.25 percent, did not cut rates further.
Citi's board came under fire in recent months as Prince-led Citigroup reported billions of dollars in credit losses, and the board may face more criticism for what some investors have called a disappointing management search.
"Think of the people they could have gotten for this role, who didn't make themselves available or didn't want it. People with experience running a major money center bank. People with experience running a massive corporation. And they couldn't get someone like that," said Henry Asher, president of Northstar Group, a New York-based money manager.