Tags: Pandit | ceo | citigroup | board

CNBC’s Cramer: Pandit Was Forced Out by Citigroup Board

Tuesday, 16 Oct 2012 11:18 AM

Citigroup CEO Vikram Pandit caught Wall Street off guard by announcing plans to step down, but in reality, the board forced him out, said CNBC stock commentator Jim Cramer.

Citi's board and Pandit have reportedly been locking horns over strategies and operating performance.

"A high-level person told me he was forced out last night," Cramer said on CNBC. "This is a complete shock. No one expected this whatsoever,” Cramer added.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Citi named Michael Corbat as its new CEO. Corbat previously served as the firm’s CEO of Europe, Middle East and Africa.

Wall Street was surprised to hear the news, considering the bank was in good health.

"The divisions were all in very good shape," Cramer said.

"I don’t even want for a second to tell people that there was anything in the works to make this happen. There was nothing … this was the quarter where you give him a big raise, he was under a lot of pressure, but he got this right.”

Others expressed surprise as well.

"There's shock," a Citi executive based in New York told The Wall Street Journal. "Even senior people were surprised."

Citi's third-quarter earnings, excluding items, hit $1.06 per share, down from $1.23 a share in the year-earlier period. Revenue fell, however, to $19.4 billion from $20.83 billion a year earlier.

Earlier this year, the Federal Reserve rejected the bank's capital plans and dividend increase after a stress test, CNBC reported, adding that under Pandit, the bank also sold a stake in a brokerage operated by Morgan Stanley for a low price.

Meanwhile, Pandit’s departure will help the bank, said Sheila Bair, who clashed with him when she was chairman of the FDIC.

“This was a very positive move and the board discharged its responsibilities, and I think they should be commended,” Bair said in an interview with Tom Keene on Bloomberg Radio.

Pandit, a former hedge fund manager who had led the company since 2007, wasn’t a good fit because of his lack of experience in more traditional banking, Bair said, while praising the board of directors, led by Chairman Michael O’Neill.

“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 told Bloomberg News.

“O’Neill is a former commercial banker, he does have a very good reputation, a very good track record, understands banking, and I have a lot of confidence that he and his board are making the right decision.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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Citigroup CEO Vikram Pandit caught Wall Street off guard by announcing plans to step down but in reality, the board forced him out, said CNBC stock commentator Jim Cramer.
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2012-18-16
Tuesday, 16 Oct 2012 11:18 AM
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