Bloomberg reports that the board of directors replaced Chief Executive Officer Vikram Pandit with Michael Corbat, who 'will place a special emphasis on sharpening the company’s focus on achieving sustained, strong operating performance', Chairman Michael O’Neill said on a conference call Tuesday.
That may mean cutting jobs, overhauling management, exiting businesses and improving ties with regulators, who this year blocked Pandit, 55, from fulfilling a pledge to restore shareholder payouts, said analysts, investors, employees and former Federal Deposit Insurance Corp. Chairman Sheila Bair.
And The New York Post reports that Pandit's sudden exit has signaled to Wall Street that Citi, the shrinking financial colossus, is headed for an even bigger downsizing.
Citi’s new chieftain, Michael Corbat, a 29-year bank veteran who was already tasked with selling off assets (he was head of Citi Holdings - the 'bad' bank), is expected to aim for more aggressive divestitures than those under Pandit’s tenure.
Analysts predict Corbat will shrink the bank further to streamline operations and boost profit margins.
'This can be done with more clear financial targets, more aggressive expense control . . . and more aggressive divestitures', CLSA analyst Mike Mayo said.
Jeff Harte, bank analyst at Sandler O’Neill, added: 'We think (Citi) may de-emphasize investment banking further, and there may be more focus on near-term results under Corbat'.