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Couple of Thoughts on Citigroup Post-Pandit

rcwhalen's picture




 

 

“I viewed [Pandit’s] resignation as a positive. The board is doing its job, by opening up a new chapter for Citigroup. I take at face value what the board said about his departure. The Citi board is being responsible to shareholders. The bank's performance under Pandit was very bad. Citi's board is opening a potentially new direction, and should be commended.”

 

Former FDIC Chairman Sheila Bair

The departure of Vikram Pandit as CEO of Citigroup (C) should come as a relief to the markets, regulators and customers – indeed, just about everybody besides the volatility junkies who like to trade this very liquid, very unstable stock.  Apologies to Jim “Mad Money” Cramer. A couple of points:

First, the mess at C starts with the board of directors.  Pandit was brought in as an emergency hire to replace Chuck Prince, the former C general counsel who pretended to be CEO for a very painful but brief period.  The C board at that time was basically a group of cronies who did whatever former CEO Sanford Weill wanted.  Thus when he was toasted in the WorldCom analyst scandal, there was a huge vacuum left behind.

Prince was seen as acceptable by the C board because he was acceptable to former CEO Sandy Weill and his Chairman and political protector Robert Rubin.  Rubin perhaps more than any other single board member, is responsible for the corporate governance fiasco at C.  Now that Dick Parsons, another Weill crony who IMHO also is deeply culpable in this governance mess, has left the scene, C literally has to rebuild its corporate governance and internal controls from scratch. 

Second, the tenure of Pandit at C is yet another case of rape and pillage by a senior manager with no devotion to growing shareholder value.  Like Prince and Weill, Pandit walks away from the wreckage of C with hundreds of millions in compensation.  When are federal regulators going to demand that executive compensation at banks be tied to financial performance?   If Pandit were compensated proportionate to how he rewarded C shareholders, his compensation would be a tenth of what he has received as CEO.

Third point is that I see the choice of the bank’s European and Middle Eastern division, Michael L. Corbat, as a positive for the bank’s shareholders and customers.  C has not had a CEO with OPERATING SKILLS in more than two decades.  Even John Reed, who was shown the door by Weill after the Raul Salinas/Citi Private Banking scandal, was not an operator of banks.  The markets should give Corbat a chance, but his biggest problem is the dysfunctional C board.

Final point is that we should not look for big changes at C in the near term.  C’s business is much smaller than before the crisis, but that also means less ability to generate revenue.  The cash ESP in Q3 2012, ignoring the “extraordinary” charges, was actually quite miraculous.  C is the only bank that actually expanded net interest margins during the period. 

The most important thing for Corbat is to focus on operating the bank and trying to avoid more of these all-to-frequent “extraordinary” charges to earnings.  Corbat needs to get C through the Fed’s next set of stress tests and then focus on running the remaining as well as possible.  You can judge Corbat’s success by how much he is able to stay out of the news. And of course, we will all be watching.  

I am scheduled to be on The Nightly Business Report tonight to talk C. 

 

 

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Wed, 10/17/2012 - 09:33 | 2897745 geno-econ
geno-econ's picture

According to Dick Bove  Citi now a" screaming Buy", but he has been saying that since 2008.  Watch for a complete house cleaning in which case Bove may be right this time because Citi will be better prepared for the pain sure to follow in 2013 as a result of converging factors constituting a Perfect Economic/Financial/Political Storm.

Wed, 10/17/2012 - 09:13 | 2897681 SmoothCoolSmoke
SmoothCoolSmoke's picture

My take is those to dicks quit to put the finishing touches on their compound/bunkers in Patigonia.  They know what's coming.  Mofos.

Wed, 10/17/2012 - 09:08 | 2897667 Eugend66
Eugend66's picture

May I ? .... . Fuck Citi and V Pandit. That`s all.

Wed, 10/17/2012 - 08:06 | 2897554 Dr. Engali
Dr. Engali's picture

Ridiculous article. The two top guys leave suddenly and you don't think something is rotten under the hood? In a real market( not this centrally planned policy tool) this stock would have been cut in half on news like that. There are more cockroaches that will come out of this.... Book it!

Wed, 10/17/2012 - 01:12 | 2897398 luckylongshot
luckylongshot's picture

When both the top two execs of Citigroup leave suddenly on the same day it means something is badly wrong....there is more to this story than just Vikram Pandit deciding it was time to go.

Wed, 10/17/2012 - 03:18 | 2897447 Tapeworm
Tapeworm's picture

Did they fuck up in unloading their worthless CMOs on the FED?

 That would get them fired if they didn't dump all of that crap on the taxcows.

Tue, 10/16/2012 - 23:31 | 2897241 Bay of Pigs
Bay of Pigs's picture

This turd should have been flushed long ago. And its still a turd no matter how much polish you use to shine it up.

 

Tue, 10/16/2012 - 21:24 | 2896709 disabledvet
disabledvet's picture

turning this Financial Aircraft Carrier around will take time...and it will be left to those underneath to make it happen. What is needed is confidence in the staying power of the folks at the top in creating actual "bankers" for a change. Proof of the pudding is in the eating...but the idea that Citi "has time" i think is incorrect. The last thing you want to do as the incoming CEO is to be seen "waiting" while there are fortunes to be made...indeed are being made. The bottom line is quite simple: the way forward is the way it always is through lending. Straight up...that's it. Get to work on it Citi People!

Tue, 10/16/2012 - 21:23 | 2896705 bilejones
bilejones's picture

What's  remarkable is that for a passing Saudi Prince Citi's been dead money for thirty years,

Quite an acheivement.

Tue, 10/16/2012 - 20:39 | 2896574 tony bonn
tony bonn's picture

"....the Fed’s next set of stress tests ...."

bbbbwaaahahahahahahhhhaaahahahahahhahahahahahhahahahhaahhahahahahhhhhaaaaahhhaaaahhaha

!!!!!!!!!!!!!!!

i just lost all respect for you.

Tue, 10/16/2012 - 20:15 | 2896510 SILVERGEDDON
SILVERGEDDON's picture

Vikram Pandit is the top choice as Ben Bernanke's replacement at the Fed. Superbly qualified, abnd he will do everything the POTB tell him to do. 

PERFECT POTB PANDERER !!!! 

Tue, 10/16/2012 - 20:07 | 2896498 knukles
knukles's picture

C as an entity is purely dysfunctional.
A agglomeration of hyper internally competitive fiefdoms who attempt to survive by raiding each other's revenue streams (Experience, BTW)
Culturally they fight one another 4 1/2 days a week and talk about the competition during the remaining hours on Friday before skedaddling.

It is impossible to manage.

Tue, 10/16/2012 - 22:38 | 2897046 cynicalskeptic
cynicalskeptic's picture

Also, an entity that has gone bankrupt once a decade for the last 40 years - never with any real consequences.  Those that made the bad bets got out before the merde hit the fan and somehow Citi always got bailed out - povertly or covertly...... just came out that the Fed bailed hem out over their failed Latin American loans 

Citi has played fast and loose with NO consequences for the last 40 years

http://www.nybooks.com/articles/archives/2011/jul/14/busts-keep-getting-... (among many)

Tue, 10/16/2012 - 19:43 | 2896461 patb
patb's picture

maybe the FBI had a little visit, now that Raj Gupta is singing like a bird.

Wed, 10/17/2012 - 10:03 | 2897851 Joe Davola
Joe Davola's picture

Chief Executives responsible for what their underlings do, what f--king country do you think we live in?

Wed, 10/17/2012 - 09:02 | 2897654 Dburn
Dburn's picture

It looks like they were both fired. Patb may be on to something. Maybe it involved the bank as a whole ( probably) or maybe both of these turds had some sledge come up from their past. It was no secret that Bair wanted Pandit gone from the day he took over from Prince. 

Tue, 10/16/2012 - 19:43 | 2896456 Joebloinvestor
Joebloinvestor's picture

" When are federal regulators going to demand that executive compensation at banks be tied to financial performance?"

I thought shareholders owned this company and had a say in this. (sarcasm off)

Tue, 10/16/2012 - 19:42 | 2896455 buzzsaw99
buzzsaw99's picture

a tenth? i wouldn't pay that maggot with the sweat off my nuptials. die pandit you freak!

Wed, 10/17/2012 - 03:14 | 2897445 Tapeworm
Tapeworm's picture

That's not very charitable. The Sophia wannabe lookalike on CNBS was all wet down there when she reported on Chuck Prince's famous line about how C needed to keep dancing while the muzac still played.

 http://www.youtube.com/watch?v=xS5oCLXrQLs&feature=related

Tue, 10/16/2012 - 19:41 | 2896452 PKF
PKF's picture

I remember seeing a video of some Prince of Saudi Arabia who owned/owns a big chunk of C...he was at his stables and horses were walking around.  He was being asked about C and Pandit.  This had to have been in the first year of Pandit's employment.

I wish I could remember the name of this Prince.  He was all dressed up in his horse-riding costume.  I've never seen a more disgusting wealthy, self-entitled person in my life.  I would bet that no one had ever said the word, "NO," to him EVER.

I immediatedly called C and canceled my credit card with them.  They kept begging me to stay and finally transferred me to some manager and I told him about this Prince.  He said, "OK, I totally understand why you're closing your acccount."

Anyone else remember this Prince or video?  Alabahah?  Shit, I'll never get these ME names right.  However my last name can't be pronounced by anyone.  I bet he fired Pandit.

Tue, 10/16/2012 - 21:35 | 2896757 bilejones
bilejones's picture

https://en.wikipedia.org/wiki/Al-Waleed_bin_Talal

 

Really couldn't find it, huh?

 

What a moran.

Tue, 10/23/2012 - 23:45 | 2914898 PKF
PKF's picture

I couldn't remember how to spell 'al-walled bin talal'  You are the pug, not me.  I found the You Tube today.

But why share it with you....you'd just get all excited and have to.....well, you know.

Tue, 10/16/2012 - 22:49 | 2897106 Skateboarder
Skateboarder's picture

What the hell is a moran?

Tue, 10/16/2012 - 23:56 | 2897293 prains
prains's picture

better still what is a moraine

 

a mass of rocks and sediment carried down and deposited by a glacier, typically as ridges at its edges or extremity.

Wed, 10/17/2012 - 01:53 | 2897419 ebworthen
ebworthen's picture

Sounds like a scree.

Screes of pain on the moraines of Spain,

Soon to rain on the brain pans of main,

Street America and Euro-Alleys

While elites count their tallies.

(and pet their horses)

Tue, 10/16/2012 - 23:57 | 2897296 prains
prains's picture

much like a dried shit stain around the anus of humanity = bankers

Wed, 10/17/2012 - 00:03 | 2896623 CIABS
CIABS's picture

No one knows who the mystery prince is.  People have Googled, called the company, trudged through Saudi Arabia, asked everyone who might know, but nobody can figure out who he is.  It's one of the great mysteries of our time.

Wed, 10/17/2012 - 10:08 | 2897869 Joe Davola
Joe Davola's picture

If only that enigma could be unwrapped.

Tue, 10/16/2012 - 19:15 | 2896398 becky quick and...
becky quick and her beautiful mouth's picture

remmeber the news that broke 2 days ago about unfunded pension liabilities really being 1.2 trillion?

google citigroup pension discount curve.

whoops.

Tue, 10/16/2012 - 17:49 | 2896250 patb
patb's picture

I suspect either an internal scandal, (Sexual, Financial) or a major earnings hit, perhaps, C is wildly overexposed in some hidden way to Spain or Greece.

 

So when they put this together, they decided to throw him overboard now but will try and hide this until after the election.

 

 

Tue, 10/16/2012 - 18:06 | 2896241 booboo
booboo's picture

Why in an age of never ending bailouts and world wide looting does Corbat "need to get C through" fuck all? It appears to me that all any large financial institution has to do in today's incestual environment is to show up to work 3 days a week and not fuck a wombat in public and the Fed insures he/they stays in the game. Banking analysts have gone the way of the buggy whip until a functioning MARKET returns and the Federal Reserve is horse whipped into submission. Yammering on about shitty balance sheets and loan loss reserves falls on deaf ears in a Walking Dead market and don't tell me that they have been punished, they never were a multi hundred dollar stock, more like flotsam on a sea of shit.
Mark it ZERO

Tue, 10/16/2012 - 17:29 | 2896203 calgal
calgal's picture

I took this article seriously until he said "Corbat needs to get C through the Fed’s next set of stress tests and then focus on running the remaining as well as possible."

FED/STRESS TEST = SMOKE/MIRRORS

um......FAIL

you have 0 credibility...next....

Tue, 10/16/2012 - 17:15 | 2896165 ebworthen
ebworthen's picture

Best of luck on the Nightly Business Report.

I smell something fishy; how's the Citi bottom line really.

Could very well be the Citi Board pushed Pandit out so they have someone to blame for bad assets that are "discovered" after he leaves.

Pandit will be fine as he has plenty of $$$ and is a member of "the club"; Goldman Sachs next, or will Jamie Dimon hire him to pick his brain?

Susie Gharib is a pretty and smart GILF.

Wed, 10/17/2012 - 06:30 | 2897497 Withdrawn Sanction
Withdrawn Sanction's picture

I smell something fishy; how's the Citi bottom line really.

Me too.  And so does the stock market apparently.  C is trading at a price-to-book of about 0.59 (last I checked), which suggests to me that the market does not like/trust the numbers put out on C's financials.  Why should they?  With suspension of mark to market rules, it's deuces wild as far as asset valuations are concerned.  But while Citi (and the other mega banks) can lie their faces off on financials, evidently the market sees through the lies, or is at least unwilling to give the big banks the benefit of the doubt.  See ya, Vikram; dont the let the doorknob catch you in the ass on the way out.

Wed, 10/17/2012 - 06:48 | 2897503 Winston Churchill
Winston Churchill's picture

One acronym sums it all up for all the TBTF banks.

HELOC's. If thiese loans were marked to vakue ,all of them are wildly insolvent.

The major reason for the snails pace in foreclosures is those HELOC losses have to be

realised at that point.

Tue, 10/16/2012 - 17:12 | 2896161 LMAOLORI
LMAOLORI's picture

 

 

My thought on him leaving good riddance

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