CitiGroup
Overview of CEO’s Crisis Leadership
By Kristen Bennett
BUSM 520-Assignment One
5/4/2010
Dr. Michael McDermott
CEO
Vikram Pandit is the Chief Executive Officer of Citi. Before
being named CEO on December 11, 2007, Mr. Pandit was
Chairman and CEO of Citi's Institutional Clients Group,
which includes Markets & Banking and Citi Alternative
Investments.
Previously, Mr. Pandit was President and Chief Operating
Officer of Morgan Stanley's institutional securities and
investment banking business and was a member of the
firm's Management Committee.
Mr. Pandit earned a PhD in Finance from Columbia
University in 1986. He also received an MS degree in 1977
and a BS degree in electrical engineering in 1976 from
Columbia.
Crisis Snapshot
Over the past several decades, the United States government
has engineered at least four different rescues of the institution
now known as Citigroup. Despite the most recent tax-payer
funded rescue of $25 Billion in Federal bailout money, Citigroup
was insolvent and on November 17, 2008 Citigroup announced
plans for about 52,000 new job cuts, on top of 23,000 cuts
already made during 2008 in a huge job cull resulting from four
quarters of consecutive losses and reports that it was unlikely to
be in profit again before 2010.
Many senior executives were fired[ and but Wall Street
responded by dropping its stock market value to $6 billion,
down from $300 billion two years prior. As a result, Citigroup
and Federal regulators negotiated a plan to stabilize the
company and forestall a further deterioration in the company's
value. The arrangement calls for the government to back about
$306 billion in loans and securities and directly invest about $20
billion in the company. The assets remain on Citigroup's balance
sheet.
On January 16, 2009, Citigroup announced its intention to
reorganize itself into two operating units: Citicorp for its retail
and investment banking business, and Citi Holdings for its
brokerage and asset management. Citigroup will continue to
operate as a single company for the time being, but Citi Holdings
managers will be tasked to "take advantage of value-enhancing
disposition and combination opportunities as they emerge", and
eventual spin-offs or mergers involving either operating unit
have not been ruled out.
On February 27, 2009 Citigroup announced that the United
States government would be taking a 36% equity stake in the
company by converting $25 billion in emergency aid into
common shares. Citigroup shares dropped 40% on the news.
On June 1, 2009, it was announced that Citigroup Inc. would be
removed from the Dow Jones Industrial Average effective June
8, 2009 due to significant government ownership. Citigroup Inc.
was replaced by Citigroup's sister firm, insurance company
Travelers Co.
Pandit’s Crisis Leadership
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Citibank's Vikram Pandit has been named one of the worst CEOs in America. But Pandit is unfazed and is focused
on turning Citibank around. Pandit outlined his plans in an exclusive interview with CNN's Matthew Chance.
Interview Text:
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CNN: You have been named the worst CEO. Have you considered stepping down?
Vikram Pandit: I have a job to do and haven't finished it. So I will keep doing it. We have gone through enormous
change at Citi. New management team has been brought in to cleanup after the crisis and we have made progress,
restored financial strength and restructured Citi.
CNN: Shouldn't you be held accountable for the massive investor losses?
Vikram Pandit: I hold myself accountable to restore Citi to its original position. I hold myself accountable to get Citi
through this economy. The new management and the leadership team has come in with a lot of assets particularly
concentration on the consumer.
CNN: The government is on a lookout for a possible successor to your position?
Vikram Pandit: Speculation is natural when we have made losses of the kind that you have mentioned. This
management team was brought in to address these issues at Citi.
CNN: Will Citi return the bailout money?
Vikram Pandit: $ 45 billion has been invested in Citi and much more has been invested in other banks. All due to
what happened in the financial markets post Lehman Brothers and the lack of confidence they created. A lot of
programmes have been put in place to support banks. Our goal is to repay every dollar as fast as possible with a
great rate of return. Meanwhile we will keep paying the government .5 billion in dividend.
http://ibnlive.in.com/news/vikram-pandit-vows-to-bring-citibank-back-on-track/94479-7.html
Vikram Pandit’s Leadership Style
• Citi's stunning decline has increased the
scrutiny of Mr Pandit's personality and
management philosophy and raised questions
over whether his methodical, technocratic
style is what the company needs to survive.
• When asked to point out Mr Pandit's most
visible attributes, friends and foes point to his
sharp mind and calm, professorial manner.
Vikram Pandit’s Leadership Style
Cont’d
According to FT.com, his critics say that Mr Pandit’s sharp mind and passion for
intense analysis – often carried out alone with only spreadsheets for company –
have hindered his development as a chief executive. “He is not a leader of people,
he is a quantitative trader who overanalyses things and can take ages to make
tough decisions,” says a former Morgan Stanley banker.
Mr Pandit points to his traditional Indian upbringing as a source of calm. “I cannot
deny that a piece of my Indian upbringing stayed with me,” he says. “As I go about
my life, there is a clear sense of Karma, that the tide is going to come and go and
the main thing you have to do is influence where you are on the tide.”
But Citi’s woes might call for more visionary and charismatic leadership than he
can offer.
Leadership Qualities Comparison
What his Qualities are:
• Methodical
• What they should be:
• Previous list except for
Technocratic.
(philosophy that advocates
the enlistment of a bureaucracy of highly trained engineers,
scientists, or technicians to run the government and society)
• Technocratic
• Focused
• Charismatic
• Calm
• Emotionally & Socially
Intelligent (empathy,
social skills, motivation)
• Professional
Critical Analysis of Vikram’s Style
While I think that some of his qualities are clearly beneficial to have
during an crisis, it is clear that the way he presents himself in his
answers to questions and the decisions he has made in staffing he
keeps himself removed socially and emotionally.
As Goleman states in “What makes a leader”, Harvard Business Review,
“IQ is important, but emotional intelligence (EI) is the sine quo non of
leadership”. A great leader has all 5 components of EI:
•Self-Awareness-Does he really?
•Self-Regulation-Clearly he does!
•Motivation-?
•Empathy-No outward sign of it?
•Social Skill-Doesn’t come off that way?