Vikram Pandit, Citigroup Inc's newly appointed chief executive officer, may cut costs and sell assets to shore up capital in the face of growing mortgage losses.
"Nothing is off the table," Pandit, 50, said in an interview.
Each of Citigroup's businesses will be scrutinized "objectively and dispassionately" as part of a "front-to-back review" of expenses and productivity, he said.
Citigroup picked Pandit, a former Morgan Stanley president who joined less than six months ago, to succeed Charles Prince, who was forced to step down when the biggest US bank said mortgage-related writedowns may reach US$11 billion in the fourth quarter. Citigroup's credit rating -- currently AA from Standard & Poor's -- is being reviewed for a possible downgrade.
"Citi is the worst-capitalized bank of its peers by a longshot," CIBC World Markets analyst Meredith Whitney said.
Citigroup, based in New York, has faced shareholder criticism for more than a year, including complaints in July last year from the bank's largest individual investor, Saudi billionaire Alwaleed bin Talal, over escalating corporate expenses. Prince responded by pledging to cut expenses by 10 percent by 2009 and eliminate 17,000 jobs.
"The most important priority to focus on is productivity," Pandit said yesterday on a conference call with analysts.
He said he'll "make sure we're looking at our cost structure."
A 22-year Morgan Stanley veteran, Pandit joined Citigroup in July as head of alternative investments, was promoted in October to oversee all trading and investment banking and now runs the whole firm. Citigroup employs more than 300,000 staff in 100 nations, including consumer branches that Pandit has no experience managing.
"As big an organization as Citi is, it's going to take a while for Pandit to get his arms around it and to go through that segment analysis," said Eric Boyce, of Hester Capital Management in Austin, Texas. "Pandit is receptive to going in a new direction and not following the Prince game plan, which obviously didn't bring value to shareholders."
Citigroup has fallen 40 percent this year in New York Stock Exchange composite trading, the worst performance in the Dow Jones Industrial Average.
"Our expectations were in line with the market's expectations," Pandit said. "Today's price action is not necessarily unique and it's not unlike some of the action we've seen in the last many weeks."
Citigroup faces its worst financial crisis since 1991, when predecessor company Citicorp had to suspend dividend payments to shareholders for three years and seek a US$590 million investment from Alwaleed.
The bank's Tier 1 capital -- a cushion against bad loans that's monitored by regulators -- fell to US$92.4 billion as of Sept. 30, or 7.3 percent of risk-adjusted assets.
The ratio, while higher than the 6 percent required for a "well-capitalized" bank, was down from 8.6 percent a year earlier and below the 7.5 percent threshold Citigroup has set as its goal.
"It cannot be ruled out that a major business unit or more may be monetized," CreditSights Inc analyst David Hendler said in a report.
Citgroup raised US$7.5 billion last month by selling preferred stock to the ruling family of Abu Dhabi. Whitney said Citigroup still needs to raise US$30 billion more, and may have to cut its dividend. The dividend of US$2.16 on an annual basis amounts to about US$2.7 billion a quarter.
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