After Vikram Pandit, a smaller Citi could get smaller yet
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The incredible shrinking bank may have to shrink more. In the hours after Tuesday's surprise announcement that Citigroup CEO Vikram Pandit was stepping down, speculation was rife, and facts scant, about what lay ahead for the nation's third-largest bank.
Pandit left after a series of embarrassments and missteps that apparently unsettled Citigroup's board, including a "no" vote from shareholders on his pay package and a ruling from the Federal Reserve that the bank was not strong enough to raise its stock dividend.
Under his successor, one possibility given high odds by financial analysts is a strategy of more cost-cutting, more shrinking and more focus on boring, traditional banking, like making loans.
"It's going to get a lot smaller,'' said Gerard Cassidy, a long-time banking analyst at RBC Capital Markets. "You've got to shrink to make big money.'' In the nearly five years since Pandit took over as CEO, he shed businesses and cut jobs. Staff fell from 375,000 when he took over to 262,000.
Once the US's largest bank, Citi is now the third-largest, with $1.9 trillion in assets. It trails JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.
Citi's new CEO is Michael Corbat, 52. He had been the CEO of Citigroup's Europe, Middle East and Africa division. He also ran Citi Holdings, which contains assets that Citi wants to sell.
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