Citigroup Inc. Chief Executive Officer Vikram Pandit said the bank still has capacity to return more capital to shareholders and will seek clearance for a “meaningful” payout after the Federal Reserve rejected an initial plan.
The central bank, which said Citigroup’s proposal would have caused the firm’s capital to fall below a minimum requirement in a severe economic slump, should make its models public, Pandit wrote in an employee memo obtained by Bloomberg News. Capital plans often seek clearance to boost dividends and buy back shares, which the Fed allowed for JPMorgan Chase & Co. and Wells Fargo & Co.
“We still believe that our company has the capacity to return more capital to shareholders,” Pandit said. “We will work with the Federal Reserve to formulate a plan that returns meaningful capital while satisfying our regulators.”
Pandit, 55, is managing the fallout from yesterday’s results after telling shareholders since last year that Citigroup would be ready to return capital to shareholders in 2012. The New York-based bank will submit a new plan to regulators, the company said yesterday. Its shares fell 2.9 percent to $35.39 at 10:38 a.m. in New York.
The Fed’s decision “is disappointing, but we remain very optimistic about the long term,” Pandit wrote in his memo.
Shannon Bell, a company spokeswoman, declined to comment on the memo.
Pandit scrapped the company’s dividend in 2009 and reinstated a 1-cent payout last year. The Fed didn’t object to keeping the current quarterly payout, Citigroup said.
“Our hope was that this move would be a prelude to greater capital returns in the near future,” Pandit wrote. “That goal has not changed.”