Vikram Pandit’s ouster as head of Citigroup Inc. is a “step in the right direction” and should have happened earlier, banking analyst Joshua Rosner said.
“This move could have happened three years ago, probably should have happened three years ago,” Rosner, an analyst with Graham Fisher & Co., said today in an interview on Bloomberg Television’s “Surveillance” with Tom Keene. “You had a board that wasn’t independent and strong in the same way that the current board seems to be.”
The Citigroup board replaced Pandit, 55, with Michael Corbat, 52, as CEO on Oct. 16 after concluding that his mismanagement of the New York-based lender’s operations caused setbacks with regulators, a person with knowledge of the discussions said. Chief Operating Officer John Havens, 56, also resigned. Chairman Michael O’Neill oversaw the change, six months after shareholders elected him to the board’s helm.
“You now have a restructuring guy who really has shown an interest in making sure they get back to the basics of blocking and tackling,” Rosner said. “You’re going to continue to see them rationalize their businesses.”
Citigroup directors selected Pandit as CEO in December 2007 as the lender faced billions of dollars in losses tied to subprime mortgages. Pandit promoted Havens to oversee the firm’s institutional clients group, which includes trading and investment banking operations.
“They put all their apples into that cart and they had to stick with it,” Rosner said of the board.
Pandit had been cutting jobs and selling off unwanted assets at Citigroup, the third-biggest U.S. bank, before directors pushed him out. Corbat has since told analysts and Citigroup executives that he’s not going to change the bank’s strategy.
“They’re going to narrow their focus,” Rosner said. “I’d like to believe that’s where they’re going.”