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Here's What Really Happened to Citigroup's (NYSE:C) Vikram Pandit
The only big deal about Vikram Pandit "stepping down" as Citigroup Inc. (NYSE:C) CEO and his removal from the board is that it didn't happen sooner.
The truth is he didn't leave voluntarily. He was given an ultimatum by the "new" board of directors: resign or be fired.
Poor old Vikram. This was a setup from the start.
He ended up at Citigroup when the mega-bank bought his Old Lane hedge fund for more than $800 million.
Poor old Vik pocketed about $165 million in the sale and continued to run the fund, some say into the ground, until Citi shut it down.
In 2007, my favorite Goldman Sachs Group Inc. (NYSE:GS) ex-CEO Robert Rubin (who after pandering to all the big banks in the country as Secretary of the Treasury in Bill Clinton's administration, then pimped himself to Citigroup after allowing Citibank to merge with Sandy Weill's Travelers insurance conglomerate (that owned Salomon Smith Barney) in an illegal deal that required Congress to kill prudent banking laws (Glass-Steagall) to make it legal actually handpicked Vikram to run the bank.
Super rich-boy Bob Rubin, of course, had nothing to do with running Citibank after making it the mega-bank it became as a result of the merger; he was merely a special consultant to the board, or some B.S. like that.
But here's what really happened...
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Why Citigroup CEO Vikram Pandit Was Forced Out (NYSE: C)
Citigroup CEO Vikram Pandit announced today (Tuesday) he has made an abrupt departure from the troubled bank, the day after it reported third-quarter earnings that beat estimates.
The story became more interesting as the day wore on after it was announced he was forced out by the board.
The theories as to why Pandit would be asked to leave got juicier as the Citigroup Inc. (NYSE: C) CEO's exit was paired with the co-resignation of Citi COO John Havens, a long-time associate of Pandit.
Mike Holland, chairman of New York-based Holland & Co, which oversees more than $4 billion of assets told Reuters, "It's not a shock that [Pandit] is no longer there, but the surprise is this is all happening very quickly. Why is he leaving so quickly? I'm not a Citi shareholder, but if I were I'd be disappointed that Havens is gone, in some ways more than Pandit."
The timing hinted the two exits were not simply a natural transition, but instead related to some skeletons lurking in the bank's boardroom.
Just as quick and startling was the immediate removal of Pandit's name and photo from Citigroup's Website.
The swift announcement that Michael Corbat, previously chief executive for Europe, Middle East and Africa, would replace Pandit as Citi's CEO and board member also raised some eyebrows.
So what could've caused this sudden changing of the guard?
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What the Moody's U.S. Bank Downgrades Mean for Investors
Moody's ratings agency issued five U.S. bank downgrades Thursday and a total of 15 cuts for global institutions, but markets shook off the news.
The ratings agency cited concerns about the stability of the global systems. Moody's said the banks are not as sound now as they were before the recent global financial woes and contagion.
"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Greg Bauer, Moody's Global Managing Director, said in a statement Thursday.
Included in the ratings cuts were Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC) and JPMorgan Chase (NYSE: JPM).
Bank of America and Citi are now rated just two notches above junk status, while Morgan Stanley sits a hair higher at three notches above junk.
Moody's announcement came after the close Thursday, a rocky day for markets with the Dow Jones ending down 250 points and the Nasdaq lower by 71.
The cuts appeared to be a non-event in trading Friday. Shortly after the open, all three major indexes were modestly higher, with affected banks all in the green.
But Moody's U.S. bank downgrades could be a precursor to aggressive trading activity.
"It is a trading indicator that speaks to more volatility in the future for the banks as traders will be jumping all over earnings, derivatives moves, counterparty fears, correlation concerns, "negative watch" implications and regulatory impacts," said Money Morning Capital Waves Strategist Shah Gilani. "I expect the volume in financials to go higher as traders play them more and more."
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Stock Market Today: Citigroup Earnings (NYSE: C), U.S. Retail Sales Fuel Rally
Citigroup Inc. (NYSE: C) followed the lead of JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) when it reported better-than-expected earnings Monday morning, sending the Dow up more than 100 points.
Citigroup earnings, along with a healthy U.S. retail sales report, fueled a morning rally that followed the markets' worst week of 2012. The Dow last week lost 1.6%, the S&P 500 Index sank 2% and the Nasdaq slumped 2.3%.
The Dow shot up about 123 points in the first few minutes of trading, and Citigroup climbed 3%. The Dow cooled its soaring start to about 65 points by 1 p.m. EDT, and Citi was last trading at $34.04, still up about 1.9%.
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