Prince Alwaleed Praises Pandit for Citigroup Crisis Work

Prince Alwaleed Praises Pandit for Citigroup Crisis Handling
Saudi Prince Alwaleed bin Talal, during an interview at the Kingdom Center in Riyadh, Saudi Arabia. Photographer: Waseem Obaidi/Bloomberg

Saudi billionaire Prince Alwaleed bin Talal praised Vikram Pandit for his handling of the financial crisis while chief executive officer at Citigroup Inc., saying he helped position the bank for further growth.

“Many companies like HSBC, Barclays and Standard Chartered shrank and went back to their roots,” Alwaleed, the largest individual investor in Citigroup, said today at a conference in Dubai. “Citigroup never blinked on that. It’s the only global bank at the moment and really the potential is there,” 57-year-old Alwaleed said, adding that Pandit did a “good” job as CEO.

Citigroup, the third-largest U.S. bank, said Oct. 16 that Michael Corbat, 52, was picked to lead the New York-based company after Pandit’s resignation. The former CEO wasn’t a good fit because of his lack of experience in more traditional banking, according to Sheila Bair, who clashed with him when she was chairman of the Federal Deposit Insurance Corp.

Pandit oversaw the recovery of a bank that was saddled with losses and distressed assets accumulated before he became CEO, and in May 2008 he announced plans for about $400 billion of divestments within three years. As the credit crunch turned into a full-blown crisis Citigroup began accepting federal help. The dividend was cut to 1 cent, and Pandit reduced his own salary to $1, vowing to keep it there until the bank became profitable.

Citigroup ‘Weakness’

Citigroup’s “weakness” under Pandit was related to dealing with regulators, Alwaleed said today. The Saudi prince said policies under Corbat would continue, citing a company conference call.

Alwaleed, whose 95 percent stake in Saudi investment company Kingdom Holding Co. makes up more than half of his fortune, told German newspaper Handelsblatt in May that he doesn’t plan to expand investment in banks beyond Citigroup.

Global banks including HSBC Holdings Plc and Barclays Bank Plc are grappling with a European debt crisis now in its fourth year and uncertainty as the U.S. faces a fiscal cliff in early 2013, when automatic tax increases and budget cuts are set to siphon billions of dollars of purchasing power from the economy.

Citigroup directors ousted Pandit after concluding his mismanagement of operations caused setbacks with regulators and cost credibility with investors, a person with knowledge of the discussions said last week. His departure came just a day after third-quarter results beat analysts’ estimates.

Citigroup’s $2.9 billion writedown on the Smith Barney brokerage unit and a two-level cut of its credit rating by Moody’s Investors Service contributed to Pandit’s replacement, a person with knowledge of the discussions said last week.

Net Income

Third-quarter net income was $468 million, or 15 cents a share, from $3.77 billion, or $1.23, a year earlier. Including one-time items, analysts estimated a loss of $777 million.

Alwaleed’s estimated net worth is $23.1 billion, according to data compiled by Bloomberg. That makes him the 18th richest person in the world, the Bloomberg Billionaires Index shows. His personal possessions include palaces, private jets, jewelry and a super yacht. Notable gifts include a donation of $20 million to Harvard University and $17 million to the United Nations.

The billionaire also said today he’s sticking with his investment in Apple Inc. Alwaleed and his investment company in December agreed to buy a $300 million stake in microblogging service Twitter Inc. The Saudi prince also owns an 80 percent stake in Rotana Group, which produces television across the Middle East and had estimated revenue of $1.2 billion in 2011.

Citigroup rose 1.5 percent to $37.71 at 10:13 a.m. in New York. While the stock has gained 43 percent this year, it slumped in three of four years since Pandit was publicly named as CEO in December 2007, when losses tied to the brewing crisis drove out predecessor, Charles O. “Chuck” Prince.

Pandit produced “every good idea that we had” to prevent Citigroup’s collapse during the financial crisis, former Chairman Richard Parsons told Bloomberg News in a weekend interview.

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