Vikram Pandit, the CEO who steered Citigroup through the financial crisis and a turbulent recovery, resigned abruptly on Tuesday, surprising Wall Street.
The bank said Pandit's replacement, effective immediately, is Michael Corbat, the current CEO of Citigroup's Europe, Middle East and Africa division, according to the Associated Press.
The AP said Pandit would also be relinquishing his seat on the bank's board of directors. President and Chief Operating Officer John Havens also resigned.
The memo Pandit sent to staff reads:
"After five extraordinary years, I have decided to step down as CEO of Citi. It has been a privilege and an honor to serve Citi since December 7, 2007. – Only you can understand the effort and hard work that was put in to get our company where it is today.
"There is nothing better than our third quarter earnings announcement to demonstrate definitively that we have turned this company around. Yesterday’s results show this clearly."
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Michael O'Neill, chairman of Citigroup's board, said, "We respect Vikram's decision. Since his appointment at the start of the financial crisis until the present time, Vikram has restructured and recapitalized the Company, strengthened our global franchise and re-focused the business," according to The Los Angeles Times.
In a Tuesday interview with Bloomberg Radio's "Surveillance,” Sheila Bair, the former chairperson of the FDIC, said she believes Pandit made the right move.
"I did have concerns about Mr. Pandit's qualifications to serve as the CEO of the largest commercial bank, because he had never been a commercial banker," she said.
Bair continued: "I think the board is doing their job and this should be a good model for other boards. There were obviously some issues, some shareholder unhappiness. I don't want to say anything that's not positive because I think this was a very positive move and the board discharged its responsibilities and I think they should be commended for that."
Reuters noted that Citigroup's stock stumbled in premarket trading following the announcement of Pandit's departure, but the shares later went up by 20 cents. Investors wondered why Pandit would leave after the strong third-quarter earnings reported by the bank yesterday.
However, Reuters noted that Pandit's departure came after some highly visible stumbles, such as the Federal Reserve rejecting the bank's capital plans in March after a stress test, and Pandit agreeing to a low sale price for Citigroup's stake in the brokerage operated by Morgan Stanley.
With $1.9 trillion in assets, Citigroup is the nation's third largest bank after JPMorgan Chase and Bank of America.
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