Can Pandit handle it (and should you steer clear of Citi if not)?

15 May 2008

1 minute read

Can Pandit handle it (and should you steer clear of Citi if not)?

If Meredith Whitney's right, Citi's going to the dogs no matter how hard Vikram Pandit tries to bed it down amongst the roses.

Whitney says Pandit faces an "impossible feat" in turning Citi around. The associated costs, according to Whitney, are simply too "seismic" and the revenue streams too feeble.

From the Whitney perspective, Pandit's decision to divest $400bn of non-core assets and cut 9,000 jobs makes no difference. She predicts the associated restructuring costs will be prohibitively expensive and that profits (and therefore bonuses) will be minimal for the next three to five years.

To make matters worse, questions are being raised about Pandit's stewardship of the big bank.

Why, for instance, has he placed an ex-head of Morgan Stanley's equities business in charge of everything from investment banking, fixed income, corporate banking and alternative asset management at Citigroup, despite a manifest lack of broad organisational experience?

If Pandit fails, Citi will not be a pretty sight. Is now the time to take evasive action and send your CV elsewhere? Alternatively, put the pro-Pandit case below.

AUTHORSarah Butcher

Global Editor

Od
Odysseus221
2 March 2009
Hmm. This is a daunting task. Revitalize a bank which has a capital structure of no equity and all debt. How does one create equity overnight? How does one create consumer demand? He can't grow consumer demand when demand has been muted by debt can he? If consumer demand isn't coming back anytime soon there won't be much economic growth...the political forces just plain spent America's wealth like frivolous idiots.
It takes 30 years to pay off a mortgage. Political forces that separated themselves from the Christian belief system and substituted "secularism" instead--the end result of which is catastrophe and collapse of economic system. It took 250 years to build the greatest country in the world under WASP leadership and 40 years to spend the wealth on foreign expeditions and HUD.
The fundamental changes have to be made in people's expectations and the demands it places on government.
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Pa
Paul
19 May 2008
I know at there is going to be another 2 sets of redundancies announced in the coming 6 months. The big question at Citi and in the market is how did GS & JP Morgan not get hit by the Credit Crunch? simple their risk management sat down last March reviewed the protfolio's and decided that they were not going to continue to invest in the Credit market!! seems simple to me!!!
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REP
17 May 2008
V.P. made a top impression at Morgan Stanley, very intelligent, thoughtful and visionary. What is worrisome? A lot of senior managers at MS were incapable. Top management was asleep at the wheel, dreaming of politics and empire building, while Morgan Stanley Investment Management leaders in NY and London were complete failures. Just look at GSAM in comparison.You have to wonder whether V.P. is also long on sales, but short real management ability. There are too many investment banks already. Perhaps V.P. can put Citi out of its misery.......
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Red Roger
17 May 2008
Pandit has been handed a poison chalice. Citigroup needs more capital, but whose going to buy those assets Pandit wants to sell for a reasonable amount in this environment? Add this with to fact that the back office systems are interlinked and overheads are combined and you have huge restructuring costs and deep deep do do.
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Pr
President Bongo
16 May 2008
It's all true. I'm just holding out for sweet redundancy. Easiest cost cutting measure? Fire anyone with 'global' or 'head' in their job title. This will leave only people with actual definable function e.g. keep lawyers 1-5 , fire Global Co Head of EMEA Development Strategy. And fire anyone who sends a congratualatory email to the who building welcoming someone to the team.
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