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Nov 042007

 Disgusting; U.S. Pisses Away $306b on Citigroup

Update: Vikram Pandit named CEO of Citigroup on December 11. Click here for details

Vikram Pandit is that rare Indian who has made it big within the stratospheric heights of the financial sector in New York.

A Mumbai native, Vikram Pandit is CEO of Citigroup’s Institutional Clients Group comprising of Citi Markets & Banking and Citi Alternative Investments.

There has been some speculation lately that Vikram Pandit could land the top job as CEO of Citi following Charles Prince’s recent departure amidst the bank’s disastrous exposure to sub-prime mortgages.

But others question whether Vikram Pandit has the necessary skills to run a financial behemoth that has 300,000 employees and operations in over 100 countries.

Vikram came to Citi in April 2007 when the bank acquired his multi-strategy hedge fund and private equity fund manager Old Lane for $800 million.

At the time of acquisition, Old Lane had $4.5 billion under management and private equity commitments.

Before forming Old Lane, Vikram was President and COO of Morgan Stanley’s institutional securities and investment banking business and a member of the firm’s Management Committee.

But Vikram had to leave Morgan Stanley in March 2005 after differences with former Morgan CEO Phil Purcell made his position untenable.

A PhD in Finance from Columbia University in 1986, Vikram also received an MS degree in 1977 and a BS degree in electrical engineering in 1976 from Columbia.

Vikram was in the news in September this year for his purchase of a 10-room apartment on Central Park West in Manhattan for a whopping $17.9 million. The apartment previously belonged to the late actor Tony Randall.

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Nov 042007

Embattled financial services giant Citigroup is expected to take another mega write-down of $8 billion-$11 billion on top of the $5.9 billion write-down the bank took in early October, according to reports coming out of New York City.

The huge write-down is necessary in view of the falling value of sub-prime mortgage securities held by Citi.

On Sunday, Citi also set up an exclusive new unit to manage its disastrous exposure to sub-prime mortgage securities. Citi’s exposure to sub-prime mortgage securities is a humongous $55 billion.

As expected, at Citi’s emergency board meeting today Charles Prince resigned. In a statement, Prince said:

[I]t is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honorable course for me to take as Chief Executive Officer is to step down.

Meanwhile Citi’s board named the head of its European operations Win Bischoff as interim CEO and Senior Advisor and former U.S. Treasury Secretary Robert Rubin as Chairman. A special commitee will look for a new CEO.

Once acknowledged as one of the finest financial services firms in the world, Citi today is a caricature.

On Sunday night, the WSJ (subscription required) wrote:

A decade after Sanford Weill built the insurance-to-banking-to-stockbroking behemoth through a run of acquisitions, his creation remains an often dysfunctional collection of businesses whose employees sometimes ignore or even compete against each other.

Among those mentioned as potential successors to Prince are NYSE Euronext CEO John Thain and AIG Chairman and Citi alumnus Robert Willumstad.

But in the murky corporate world, strange things have been known to happen.

And Vikram Pandit, head of Citi’s investment banking operations, could emerge as the dark horse to succeed Charles Prince.