Vikram Pandit abruptly stepped down from the helm of Citigroup yesterday after a boardroom clash at the top of the third-largest US bank.
Just 24 hours earlier, the mild-mannered 55-year-old had unveiled a forecast-beating set of results, with Citi saying it had made more money from trading bonds and boosted profits from lending. But, as the market cheered the figures, there was no hint that the man who had led the banking giant through the worst financial cataclysm in living memory three years ago was hours away from walking out of the firm.
Although Citigroup declined to comment on what it characterised as rumours, Mr Pandit was reported to have left as a result of a boardroom clash over the banking giant's strategy and performance, something that was said to have come about after months of tension at the top between Mr Pandit and Citigroup chairman Michael O'Neill.
At issue, according to accounts that emerged in the wake of Mr Pandit's shock departure, were some of the very public setbacks that have hit the bank in recent months, including the rejection by the US regulators of Citi's capital plans after a closely followed stress test.
Citi was also stung by a shareholder vote, albeit one that was non-binding, against Mr Pandit's board-approved $14.9m 2011 pay package in April. In another blow, the bank was hit by a $4.7bn write-down related to its stake in the Morgan Stanley Smith Barney brokerage business.
In nearly five years at the top, Mr Pandit had endured both testing professional challenges and public opprobrium as one of the poster boys of Wall Street excess – including a high-profile Congressional hearing in 2009, where, as one of eight bank CEOs summoned before lawmakers, he heard the Massachusetts Democrat Michael Capuano proclaim: "America doesn't trust you anymore."
Mr Pandit's departure was announced by the Citi board, which said he had stepped down "effective immediately". His long-time associate and Citi's president and chief operating officer, John Havens, has also resigned.
The two had co-founded the Old Lane hedge fund, which was bought by Citigroup in a deal that, with hindsight, became the first step in Mr Pandit's ascent to the top of the banking giant. The Indian-born financier became the head of the firm's alternative-investments arm and, in one swift move, became a leading candidate to succeed the-then chief executive Chuck Prince. He took over in December 2007, soon after Mr Prince left as the bank began reporting higher losses related to sub-prime mortgages.
Yesterday, the board said it had elected Mike Corbat, a Citi veteran who had been the head of the firm's Europe, Middle East and Africa business, to replace him. "Given the progress we have made in the last few years, I have concluded that now is the right time for someone else to take the helm at Citigroup," Mr Pandit said.
Mr 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 recapitalised the company, strengthened our global franchise and re-focused the business."
Goldman Sachs raises pay for staff after return to profit
Goldman Sachs smashed Wall Street forecasts with its third-quarter figures yesterday.
Cost-cutting by the bank and revived appetite for risk from clients helped spur the money-making machine back to more normal levels of profitability.
The investment bank, which has more than 5,000 employees in its Fleet Street offices in London, increased the amount it paid its staff for the past three months by a quarter. That means on average Goldman's 32,600 staff collected pay and accrued bonuses worth $112,700 (£69,900), up from only $46,000 in the first quarter and $90,000 in the second.
Goldman would need a superlative final quarter if staff are too match the average $376,000 they received last year.
The bank made post-tax profits of $1.51bn compared with losses of $393m a year earlier. That translated into earnings per share of $2.85 — way ahead of analysts' consensus forecasts $2.20 a share.
Chief executive, Lloyd Blankfein, said: "This quarter's performance was generally solid in the context of a still challenging economic environment."
Goldman lifted its quarterly dividend from 46 cents to 50 cents per share.
Costs-cutting saw expenses — other than salaries and bonuses — fall by 13 per cent on a year ago to $2.38bn.
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