Readers who are familiar with my sentiments involving Citigroup's just-resigned CEO Vikram Pandit will not be surprised to learn that I feel it was long overdue. But I do not wish to engage simply in negative bashing of the departed Citi CEO. I do not recall which cable television channel I was viewing when news of Pandit's resignation appeared on the screen in the form of horizontally-scrolling text. So I know I was watching neither Bloomberg nor CNBC. However I quickly switched to one of those two business-oriented channels. For which I was rewarded with some very sensible commentary in the person of Wilbur Ross and a few other pundits.
Ross expressed approval that Pandit's exit will likely result in the simplification of the financial utility's business mix. Between the remarks by Ross and other guest commentators. I learned that Citi had failed a recent bank examination by the Fed. It was also the shared opinion of the pundits that Pandit's strategy (such as it was) which never seemed to depart from that of his predecessor, Chuck Prince. Was at odds with the views of Citi's chairman, Michael O'Neill. who is said to favor higher margin businesses than those to which Pandit had continued to allocate capital.
Wilbur Ross expressed a sentiment which I heard my old boss and mentor Gerald Weiss (one-time chief planning officer of Chase Manhattan Bank NA) express often concerning Chase. Ross bemoaned Citigroup's complexity rather than simply its size per se. Weiss a former senior planning executive at General Electric went further, observing that successfully managing the unusually broad mix of businesses then in Chase's business portfolio would be a difficult challenge even for senior executives from GE or other industrial firms with senior executive ranks possessing experience bases of much greater diversity than that found at Chase or other typical money center banks of the period (the late 1980s).
Is it thus so surprising that Citi's shareholder value declined so precipitously on Pandit's watch? The ballpark figure of a 90% decline was widely cited by pundits yesterday and today.
Ross also pointedly scoffed at the hackneyed notion, as expressed by one of the anchors of the network on which he appeared hat Citigroup has to be in such a broad spectrum of businesses because 'its customers demanded it'. Ross correctly observed that most investment banking businesses had been adequately served by non-commercial banks. And further, he was unaware of such customer requests.
Perhaps shareholders of Citigroup one of which, I am not, have happier times ahead soon.
Potentially providing additional tangible value from Michael O'Neill's becoming Citigroup's chairman.
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