The management challenge @ Citi
One of the most coveted corner offices in global corporate world has an in Vikram Pandit, a person of Indian origin as an occupant. The challenge for the new boss at the corner seat of citi is to ensure that he does not get cornered.
He comes to Citi when the banking giant faces four major risks. The first is the possibility that the sub prime crisis may yet cost the wall street major more than the $11 billion that it has already written off. The second comes from a very real possibility of a US recession. The third peril is held out by the increasingly vocal shareholders who have seen an alarming 40 per cent decline in the value of the city stock over the last one-year. The fourth threat looms in terms of cultural and integration issues that will inevitably crop up from the investment of $7.5 billion that the Abu Dhabi sovereign investment fund has pumped into the troubled bank. That investment is on top of the nearly 4 per cent stock that a Saudi prince already holds in the bank.
Will Pandit measure up to all these risks and other yet unknown pitfalls? Alas his past as a manger of a hedge fund and head of institutional securities at Morgan Stanley does not give much hint of his ability to manage a bank of this vast scale.
He has talked of cost cutting as a priority. Clearly this is needed but it is something new at Citi which has been build on an expensive and aggressive growth path by acquisitions and expansion during the legendry Sandy Weil era. The problems at Citi are clearly deep set and will cause pain. Analysts are nearly unanimous in their opinion that some of the bank’s business may even have to be put on the block. That is never an easy decision especially for a relative outsider. Wall street watchers have hinted that Citi’s belligerently built credit card division may have to go. The job hasn’t started on a positive note for this global India. His former employer Morgan Stanley has put sale on citi the day Pandit took over. He will have to prove them wrong and that will clearly take some doing
One of the most coveted corner offices in global corporate world has an in Vikram Pandit, a person of Indian origin as an occupant. The challenge for the new boss at the corner seat of citi is to ensure that he does not get cornered.
He comes to Citi when the banking giant faces four major risks. The first is the possibility that the sub prime crisis may yet cost the wall street major more than the $11 billion that it has already written off. The second comes from a very real possibility of a US recession. The third peril is held out by the increasingly vocal shareholders who have seen an alarming 40 per cent decline in the value of the city stock over the last one-year. The fourth threat looms in terms of cultural and integration issues that will inevitably crop up from the investment of $7.5 billion that the Abu Dhabi sovereign investment fund has pumped into the troubled bank. That investment is on top of the nearly 4 per cent stock that a Saudi prince already holds in the bank.
Will Pandit measure up to all these risks and other yet unknown pitfalls? Alas his past as a manger of a hedge fund and head of institutional securities at Morgan Stanley does not give much hint of his ability to manage a bank of this vast scale.
He has talked of cost cutting as a priority. Clearly this is needed but it is something new at Citi which has been build on an expensive and aggressive growth path by acquisitions and expansion during the legendry Sandy Weil era. The problems at Citi are clearly deep set and will cause pain. Analysts are nearly unanimous in their opinion that some of the bank’s business may even have to be put on the block. That is never an easy decision especially for a relative outsider. Wall street watchers have hinted that Citi’s belligerently built credit card division may have to go. The job hasn’t started on a positive note for this global India. His former employer Morgan Stanley has put sale on citi the day Pandit took over. He will have to prove them wrong and that will clearly take some doing
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