US regulators who are concluding “stress tests” on banks may remove Citigroup Inc chief executive Vikram Pandit, the NewYork Post reported, citing sources it did not identify further. The regulators may have to take such a step to show the government is taking as strong a stand on banks as it did with General Motors Corp when it removed Rick Wagoner, the paper said. Citigroup finance director Ned Kelly told the paper in an interview: “Replacing (Pandit) would be dramatically destabilizing both for Citi and the system”.
“Our recent quarterly results reveal the underlying strength of the franchise and Vikram Pandit’s strategy at work to restore Citi to profitability,” a Citigroup spokeswoman told the paper. A Citigroup spokesman in Hong Kong declined to comment on the report.
US Treasury Secretary Timothy Geithner’s visit to Citigroup’s offices a week and a half ago was simply to conduct a check-up on the bank, the paper said, citing people familiar with the meeting.
On Monday, the Financial Times website said that senior Federal Deposit Insurance Corp officials have privately discussed who might replace Pandit if the bank needed more government aid. Successors being discussed by FDIC officials included CFO Ned Kelly, Gary Crittenden, his predecessor and chairman of the division containing the New York company’s non-core assets, and one of Citi’s new board members, FT had said, citing people close to the situation.
The paper said the FDIC is one of the regulators which has a say on whether Pandit steps down if the government bails out Citi for the fourth time in six months.
Last week, Citigroup had reported better-than-expected results as an accounting benefit for distressed companies, cost-cutting and improved trading results helped offset red ink from consumer lending and credit cards.
The bank, bailed out with $45 billion, joined Goldman Sachs Group Inc, JPMorgan Chase & Co and Wells Fargo & Co in signaling that massive government efforts to jump-start the ailing economy are helping boost bank earnings.
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