Vikram Pandit abruptly stepped down as CEO of Citigroup on Tuesday, shocking Wall Street, after steering the bank through the 2008 financial crisis and the choppy years that followed.
Pandit's replacement, effective immediately, is Michael Corbat, who had been CEO of Citigroup's Europe, Middle East and Africa division, the bank said. Corbat has worked at Citi and its predecessors since he graduated from Harvard in 1983, it said.
Pandit will also relinquish his seat on Citi's board of directors. A second top executive also resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also served as CEO of Citi's Institutional Client Group.
The move followed a clash with the company's board over strategy and performance at businesses, including its institutional clients group, The Wall Street Journal reported.
Shareholders also have objected to Pandit's massive pay packages. He received $15 million in 2011.
The news came as a surprise, and Citigroup offered no explanation. There was no hint of the departure Monday, when the bank announced strong third-quarter earnings.
In an analyst call that lasted an hour and 40 minutes, and a shorter call with reporters, no one asked bank executives how long Pandit planned to stay, or whether there was a succession plan in place.
AP
FILE - In this June 15, 2009, file photo, Citigroup CEO Vikram S. Pandit speaks at the National Summit in Detroit. Pandit abruptly severed his ties with Citigroup on Tuesday, Oct. 16, 2012, stepping down as CEO and a director, after steering the bank through the 2008 financial crisis and the choppy years that followed. (AP Photo/Carlos Osorio)
Close The strong quarter sent Citigroup's stock price to its highest level since early April.
Pandit's departure from the board is a clear indication that "this was a complete and unexpected break" between Pandit and Citi directors, said Chris Whalen, a bank analyst and senior managing director of Tangent Capital Partners in New York.
"This shows how dysfunctional this organization is, to have this event unfold this way," Whalen said. "They should have told us yesterday, unless they didn't know."
Still, Whalen said he does not expect the changes to mark a shift in strategic direction for the bank.
"They needed new leadership to put a face on it," he said.
Pandit is credited with slimming the bank by selling businesses, removing it from government ownership after a bailout in 2008 and righting its balance sheet after billions in losses on bad mortgage investments made before he took the helm.
Today, Citi is the country's third-largest bank, with $1.9 trillion in assets, according to the Federal Reserve. It trails only JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.
Pandit's massive pay packages have raised the ire of investors. And some in government believed the bank was too slow to address its problems as they emerged in the months before the crisis caught fire in September 2008.
In March 2009, as the crisis raged, President Barack Obama ordered the Treasury Department to consider breaking up Citigroup and removing its executives, according to a behind-the-scenes book about the crisis published last year by journalist Ron Suskind.
Treasury Secretary Timothy Geithner ignored Obama's request, according to Suskind's account. Geithner and the White House have disputed his version of events.
Pandit had another opponent in Sheila Bair, an influential bank regulator who ran the Federal Deposit Insurance Corp. during the crisis. Bair wanted the government to fire Pandit after it extended billions in bailouts and guarantees to his company. Geithner disagreed, and Pandit kept his job.
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