Vikram Pandit, Chief Executive of Citigroup may be on a family vacation in India, but still took time to praise the bank’s employees for what he called a “crucial year” in the “transformation and rebirth of the company.” In an internal memorandum sent late Monday night, Mr. Pandit lauded virtually every business and region for the strides that they made on his turnaround plans, and pointed to several signs his strategy is working.
Pandit noted “External audiences are starting to give us the recognition we have earned. “Our credit spreads have tightened, analysts increasingly like what they see, and the public is starting to acknowledge the many signs of real progress.” Saudi Prince Al-Walid Bin Talal said earlier this year that 2010 was a “make-or-break” year for Mr. Pandit. The early indicators show that Pandit has been able to right the ship.
When appointed CEO, the move was met with skepticism. Pandit’s background was primarily in fixed income and hedge funds, what did he know about running a mammoth retail bank? As it turns out, much more than his predecessor Chuck Prince did. Since taking over the helm in December 2007, Pandit had promised to streamline the sprawling company, shrink its balance sheet, and significantly tighten expenses. Then, came the financial crisis, forcing Citigroup to turn to the government for more than $45 billion of bailout money.
Although the firm incurred significant vitriol from the general public, investors have recognized that the firm is on the right track. The Treasury Department cashed out its nearly one-third stake in the bank, turning a $12 billion profit. Citigroup also posted a profit for three consecutive quarters, with earnings far stronger than many analysts projected. Next year, Pandit will finally become eligible for a bonus, after working for a mere $1 in salary over the last two years.
Citigroup still has plenty of hard work to do, and the work is far from over. The bank will face significant pressure from new regulations and higher capital requirements, which could dampen revenue. It also must contend with the fallout from high unemployment levels in the United States, turbulent market conditions in Europe, and slower growth prospects around the world.
