New York: You almost have to feel sorry for Vikram S. Pandit.
For the past two years, Pandit has tried, with mixed success, to clean up the financial mess that is Citigroup Inc. But some of his employees and shareholders are starting to lose patience. After many billions of dollars in losses, Pandit, they say, must deliver profits in 2010—or risk losing his job as chief executive.
The latest sobering news from Citigroup arrived on Tuesday, when the firm announced a gaping, $7.6 billion (around Rs35,000 crore) loss for the December quarter. That quarterly hole more than swallowed all of Citigroup’s recent earnings and left the company in the red for the year.
Citigroup suffered more than most large banks from the financial crisis and its troubles, analysts say, are far from over. Insiders say morale is low. Some Citigroup investment bankers and traders are threatening to leave for more lucrative jobs elsewhere. Employees in Citi’s giant consumer banking division say the bank seems rudderless.
It isn’t as if Pandit, 53, hasn’t tried. Since succeeding Charles O. Prince III, he has strengthened the lax risk-management practices that got Citigroup into so much trouble; cut 110,000 jobs, or around one-third of the company's workforce; and stanched red ink from toxic mortgage investments. Helped by three multi-billion-dollar US government bailouts, he also has bolstered Citigroup’s finances and slimmed down the company, selling $351 billion in assets in a challenging market.
“We have made enormous progress in 2009,” Pandit insisted on Tuesday’s conference call.
And while Citigroup’s share price has recovered from the panicked lows of last March, when it fetched less than $1, it is still worth a fraction of what it was before the crisis broke out. On Tuesday, Citigroup rose 12 cents to $3.54. That is down from a record high of $57 in December 2006.
Given that showing, Pandit is under growing pressure to prove the company can finally make money. Saudi prince Al-Walid bin Talal, a major Citigroup shareholder, said last week in an interview with Fox Business Network that the honeymoon for Pandit was over. “2010 is for him the year to make it or break it, and he has to deliver,” Al-Walid said.
Now, Pandit must lead the bank into a profitable future, rather than cope with its past mistakes. And much will depend upon the course of the global economy and the new regulations coming out of Washington—things that are beyond Pandit’s control.
©2010/The New York Times