Pandit was most recently head of the bank's institutional clients group which comprises Citi Markets & Banking and Citi Alternative Investments. He joined the bank earlier this year.
Pandit had a circuitous route into Citi. He moved to America from his home country India to complete undergraduate studies at Columbia and continued at the university for a masterÆs and then a PhD in finance. He joined Morgan Stanley in 1983 and was generally considered one of the stars of the investment bankÆs securities business during his long innings with the firm.
He quit Morgan Stanley in 2005 along with some other senior staff after a fairly public falling out with then CEO, Philip Purcell.
After he left Morgan Stanley, Pandit teamed up with six others, including ex-Morgan Stanley employees, John Havens and Guru Ramakrishnan, to launch Old Lane Partners. Old Lane billed itself as a global, multi-strategy hedge fund and private equity investor and had assets under management of around $4.5 billion.
In April, Citi announced it would acquire Old Lane and the firm would operate as part of Citi Alternative Investments (CAI). Citi did not disclose the amount paid for the firm, but media speculation put it at around $600 million. Pandit became CEO of CAI, in a deal which erstwhile Citi chairman and CEO, Charles Prince termed an ôinvestment as much as an acquisitionö. At the time, media had speculated that Pandit was being brought on board as a successor to Prince.
But no-one could have predicted how soon Pandit would be donning this mantle.
It was the subprime situation that became PrinceÆs nemesis. Citi led stakeholders, including the US bank's then largest shareholder, Saudi Prince Al-Waleed, to believe it had disclosed the extent of its subprime losses in the second quarter of this year. Investors were subsequently disgruntled at the US bankÆs November announcement that losses were actually in the $8 billion to $11 billion range. Prince took responsibility and resigned and the search for his successor began.
Pandit was always thought to be in the running for the top job but analysts were speculating that his lack of experience at the helm of a large firm and limited familiarity with the retail banking side could be disadvantages for him.
Indeed, on November 7, FinanceAsia reported that British bookie, Paddy Power, was giving 5-4 odds on John Thain getting the job, followed by Vikram Pandit at 2-1.
John Thain had been CEO of NYSE Euronext since 2004 and had formerly been president and chief operating officer at Goldman Sachs.
But Citi was not the only Wall Street firm looking for leadership. Merrill Lynch chairman and CEO, Stanley OÆNeal, resigned on October 30, after 21 years at the investment bank and five years as CEO, under remarkably similar circumstances as Prince. Merrill led investors to believe it would make subprime provisions to the tune of $4.5 billion and then, less than a month later, announced a $7.9 billion provision.
On November 14, Merrill Lynch announced Thain would join the firm as chairman and CEO. Speculation was rife that Thain had been offered the Citi job as well but had decided in favour of the smaller investment bank.
And that left PanditÆs path clear.
BischoffÆs route to the chairmanÆs job was only marginally straighter than PanditÆs. Bischoff joined Schroders in 1966 and moved up to chairman of the firm in 1995. After Salomon Smith Barney acquired the investment banking business of Schroders in 2000, Bischoff became the chairman of Citi Europe. Bischoff became acting CEO of Citi to fill the vacuum created by PrinceÆs resignation. He is educated in Germany and South Africa.
Analysts have commented favourably on his international experience.
Some analysts reckon that splitting the top job between Bischoff and Pandit is intended to address PanditÆs relative inexperience at running such a large firm. Others say it is simply because the quantum of clean-up at the US bank is huge, leading to a division of the job.
Whatever may be the case, the two head honchos at Citi are German- and Indian-born, which suggests that the beleaguered US bank is betting on a global perspective to set things right.
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