Citigroup Inc. (NYSE: C) is making a big change. The banking giant has just announced that Vikram Pandit will step down as chief executive officer. The press release also says that he will step down as a member of the board of directors. The impact is swift because the changes are "effective immediately." Supposedly this was Pandit's decision, but the share reaction is not favorable immediately. Investors are likely to fear that something new is not going the right way.
Citi has also announced that it has unanimously elected Michael Corbat as CEO and a director of the board. He previously served as Citigroup's CEO of Europe, Middle East and Africa. Pandit said about Corbat:
I could not be leaving the Company in better hands. Mike is the right person to tackle the difficult challenges ahead, with a 29-year record of achievement and leadership at this Company.
The company also announced that President and Chief Operating Officer John P. Havens, who also served as CEO of Citi's Institutional Clients Group, has resigned. He had supposedly already been planning retirement from Citi at year-end, but decided to leave now in light of Pandit's decision to leave.
Pandit claims that Citigroup is well-positioned for continued profitability and growth and said that now is the right time for someone else to take the helm at Citigroup.
Chairman Michael E. O'Neill 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. The Board and I are grateful to Vikram ... We wish him all the best with the next stage in his career.
Citigroup shares are down 1.6% at $36.01 in the premarket. Normally we would expect Mr. Pandit to at least remain on the board of directors for a transitionary period. The "immediate" nature may create some worries for those looking from outside the fish bowl. This is a change that just feels like it does not add up as far as the manner in which it is happening.
JON C. OGG