Citigroup Inc. announced on Tuesday that CEO Vikram Pandit, 55, who has held the post since the eve of the financial crisis in 2008, is stepping down.
In what The Wall Street Journal called, "an extraordinary flexing of board room muscle," the abrupt announcement followed a series of gaffes under Pandit's leadership. These included a $2.9 billion loss on a brokerage joint venture with Morgan Stanley, a "no" vote from shareholders on an executive pay package, and the Federal Reserve's rejection of a plan to buy back stock.
Citigroup shares dropped 89 percent under Pandit's five-year tenure, according to The WSJ.
Citi is now the country's third-largest bank by assets with $1.9 trillion, following JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion, the Associated Press reported. It was the nation's largest bank when Pandit took over.
The AP also reported that the number of employees at Citigroup dropped from 375,000 to 262,000 under Pandit.
Now what?
There is speculation among financial analysts that Citigroup will contract.
Its new CEO is Michael Corbat, 52, formerly CEO of Citigroup's Europe, Middle East and Africa division, also in charge of Citi Holdings, which contains assets that Citi wants to sell, according to the AP.
"It's going to get a lot smaller," the news wire quotes Gerard Cassidy, a long-time banking analyst at RBC Capital Markets. "You've got to shrink to make big money."
Because Corbat isn't widely known, there is speculation that the man thought to be behind Pandit's departure, Citi Chairman Michael O'Neill, will help steer the future direction of the bank, the AP said.
"When he ran Bank of Hawaii, he shut down up to 50 percent of its branches. It's a startling number," said Cassidy referring to O'Neill. He added that at Citi, "if the branch banking businesses doesn't make sense in parts of the United States, (he'll) get rid of it," the AP reported.
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