VikWin Pandoff: A Few Cards Short of a Full Deck

Much has been written so I’ll keep it short: this won’t be pretty unless we’re looking at a bust-up of Citi. IMHO, the esteemed Mr. Pandit and Sir Bischoff lack the experience, perspective and people-skills to run the financial supermarket that is Citigroup circa 2007. To be precise, here is what I said when interviewed for a story that ran in today’s Washington Post:

A criticism of Pandit is that he lacks experience in consumer banking, a critical part of Citigroup’s business.

“They clearly got a professional who can address the current crisis,”
said Roger Ehrenberg, an entrepreneur who worked 18 years at Citigroup
and Deutsche Bank
in investment banking and derivatives departments. “But is he the right
person to address the broader growth issues that they have? That’s a
different question.”

Ehrenberg said the separation of chief executive and chairman made sense, given Pandit’s shortcomings.

“Were they to have given him both titles, they would basically be
making the statement that they feel he is the balanced professional,
which I think the markets would have widely rejected,” he said.

There was a lot I said that they didn’t print. Like that a more logical combination might have been Vik and Bob Willumstad, given Bob’s extensive consumer experience and institutional memory, but presumably that avenue was pursued and rejected by a sane and sober Mr. Willumstad. Or that while Vik is a very, very smart markets guy, he doesn’t really have the personality or the dynamism to lead a super-complex, 300,000+ person (though likely a lot less in the near future) organization with businesses far afield from his areas of expertise. He really should be the head of banking, its risk management and its strategy. But the CEO of Citigroup?

Clearly the Board was under immense pressure to do something. They also had clearly cast a pretty wide net to find a broader-based candidate and came up with a big goose egg. Somehow they just couldn’t tap into the right combination of masochist and egotist for the job. Maybe a Presidential candidate? And then you had the natty Mr. Rubin just dying to get out of the hot seat, forcing the Chairman issue. So the Citi Board was really sitting there under the spotlight, sweating bullets, with 8-2 pocket cards yet being compelled to play the hand. So what did they do? Take the path of least resistance: justify the stultifying $800 million search fee they had already paid (read: buying Old Lane), put Vik in the CEO seat and play the hand they were dealt.

Problem is, with VikWin running the show it appears that they are a few cards short. And that there is likely little help on the turn or the river. Unless the original Citi gets back to its roots and the consumer piece is jettisoned. Then you’ve got a team that can run the corporate and investment banking show. But is this the right way to go about making that assessment and a decision of that import? You tell me.

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COMMENT:

AUTHOR: Kris Tuttle

EMAIL: kris@research2zero.com

URL: http://www.research2zero.com

DATE: 12/14/2007 08:50:08 PM

An a remote outsider I was surprised.  A hedge fund guy, no matter how smart, doesn’t seem to fit. 

It’s a monster organization demanding an intergalactic vision and immeasurable people and diplomatic skills.  It’s not a turnaround/workout job for a mid-size firm or private equity investor.

I’d think the competitors to Citi are looking to pounce on opportunities created by any drastic short-term moves and disruption that results.

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