Pandit’s Playbook
The latest round of implosions in the brokers might finally result in changes at the C-suites. Stan O’Neal is on the hotseat today, and Jimmy Cayne’s body seems to breaking down along with Bear’s stock price.
Chuck Prince’s reign at CitiCroup (C-NYSE) might be coming to end as well, and with Sallie Krawcheck likely out of contention speculation is that Vikram Pandit is next in line. Citi shareholders and employees might want to review Pandit’s moves at Morgan Stanley before he left to start Old Lane; history might well repeat itself if Pandit assumes the position:
Pandit was one of the first of a generation of Morgan Stanley stars to leave in the protracted shareholder revolt to oust Purcell. There are differing accounts why he left, but the consensus is he resigned when Purcell tried to change his reporting lines to report to then new co-president Zoe Cruz. Critics suggested he was angling for Purcell’s job but lacked the profile to do so, while supporters said he would “cringe” at the suggestion he might be the next chief executive.
No one disputes Pandit’s technical ability or underestimates his ambition, and the changes he made at Morgan Stanley are likely to be repeated at Citigroup. As head of institutional securities, he reorganized the business to focus on clients, setting up lists of the top fee-paying companies and private equity firms, then aligning bonus incentives to encourage bankers to court them.
He integrated the investment bank’s units and stretched across to asset management to serve pension funds with investment banking products. He also helped expand Morgan Stanley’s international focus, particularly into China. Rival banks followed on many of these points years later.
What he achieved at Morgan Stanley “wasn’t just an organizational change; it was a cultural change”, said one employee familiar with Pandit. He ran the institutional securities unit when Purcell gave little power to the bankers and kept tight reins on risk management, which cut deeply into leveraged finance, structured products and other credit-heavy businesses.
Or course, Pandit might not want the job and his plate is full at the moment:
Pandit faces a number of challenges at Citigroup, not least nursing some bruised egos after Prince overlooked the cream of the bank’s investment banking talent in appointing him. His promotion followed the departure of Tom Maheras, a 23-year veteran, who was highly respected.
Critics have suggested Citigroup needs less of Pandit’s technical wizardry and more practical steps to turn round its culture and business to justify Prince’s radical shake-up.
Citi’s stock seems to print new 52-week lows nearly every day, and Citi’s board might just need to make bold moves to steady the ship. The damage has been done, and a game of musical chairs is likely to start anew at Citi and the other large banks and brokers.
Fugly, isn’t it?
Pandit takes on the Citigroup challenge
Financial News
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