Big Business EconomyWritten by Havre On 16 October 2012
Pandit Out At Citi, Did O’Neil Push Him?

The big news on Tuesday was the abrupt resignation of Citigroup’s (C, NYSE, 52 week range 23.30 – 38.40) CEO Vikram Pandit, announced the day after reporting solid third quarter earnings. Pandit has been replaced, effective immediately, by Michael Corbat. Corbat has been with Citi since graduating from Harvard in 1983 and he was previously chief of the company’s operations in Europe, Middle East and Africa.

There is a lot of speculation on the Street about the sudden change at the top, with Pandit telling all that will listen that it was “his decision.” Others are saying that the recently appointed Chairman of Citi, Mike O’Neil, basically fired him. Reuters quotes one source that O’Neil wanted the CEO “to get in line soldier-style.” Others say that it is clear O’Neil is “now fully in control of the bank.”

Hawaii is familiar with Mike O’Neil as the leader of Bank of Hawaii from 2000 to 2004, which were difficult years for the bank. The company had spread itself thin implementing an aggressive expansion program throughout the Pacific. O’Neil came in, took a salary of $1 per year and turned things around. He shrunk the company’s assets by 30 percent and increased the ROE (return on equity) from below 9 percent to close to 20 percent. He did take stock options in lieu of pay and was fully rewarded for the turnaround as the share price reacted accordingly.

O’Neil joined Citi’s board in 2009 and in March 2012 he was named Chairman, replacing Richard Parsons, another Hawaii connection as he graduated from the University of Hawaii.

Sheila Bair, former Chair for the FDIC, feels that the change in management will be positive for shareholders going forward. Investors are confirming that, with shares up 6 percent in two days on the earnings announcement followed by the CEO departure.

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Havre

Randy Havre has a wealth of experience in the financial industry. In 1987, he established his own full-service stock brokerage firm, which was also registered with the SEC as an Investment Advisory Firm, managing money for the State of Hawaii’s pension fund, among other portfolios. In 1994, he started his first of three Hawaii based Venture Capital Funds. Additionally, he wrote a weekly stock column in the Pacific Business News for 21 years, taught Finance 315 Portfolio Management and Investment Strategies at the University of Hawaii for five years and is on KHON’s Morning News as a business/financial analysis twice weekly. Over the past nine years, Havre has been active in South America doing business development work for some of his portfolio companies, mentoring entrepreneurs and advising investors.

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