Monday, December 3, 2007

Vikrim Citi's New CEO?

Not sure if this is the best idea for Citigroup (C)....

The NY Times reported Sunday that Citi insider Vikrim Pandit is the lead candidate for the CEO job vacated by Chuck Prince.

According to The Times "no final decision had been made and that the four-member search committee, led by Richard D. Parsons, was reviewing other candidates.

The board is hoping that a chief executive can be named within the next week, a person briefed on the situation said. The search has been difficult and no clear choice has emerged, the person said, adding that support on the search committee seemed to be building for Mr. Pandit."

Pandit's ascension, if it happens, will not go smoothly. Several people inside Citi are vying for the job and given Pandit's age, 54 and tenure at Citi, 7 months, his getting the job would cause an exodus of candidates who would not see a vacancy at the Citi CEO office for decades. Assuming Pandit did not fail.

What to do then? Bring in an outsider. Why? Any insider that is given the spot will not be greeted by investors with glee because it will be assumed not much will change at the bank. Who then? In the past I have wished for former Goldman Sachs (GS) Co-President Hank Paulson but it would appear the chances of that are, well, nothing. My second choice would be Richard M. Kovacevich. the former Wells Fargo (WFC) chief executive, and current chairman. At 64 and an alumnus of Citicorp’s consumer banking group Kovacevich would accomplish several very important things.

He would bring a impeccable banking track record to Citigroup that would, unlike any other candidate currently being considered, give investors a sense that Citi's current problems would be fixed. At 62, Kovacevich would also not take the job long term. This would stop an exodus of talent currently at Citi as they would know the CEO job would be up for grabs again in a few years. Finally, his taking the post would finally enable Robert Rubin to do what he wants to do, get back into politics.

Nothing against Vikrim and me may eventually get the job and do it wonderfully. But, another insider being promoted at Citi, an institution investors have been begging for change at will not boost the stock. Pandit will be greeting with a heavy dose of skepticism. For one, he will have to prove his ability unlike Kovacevich who has proven he can do the job, and secondly, if Pandit is named, investors will wonder why it took so long to name him.

The question will be, was he the first pick, the last one or the only one who said yes?

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