Citi Rolls Over - 'Pandit Is Not CEO Of The Company'
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The unit has been sold to Occidental Petroleum for an unspecified amount. And the rational for the sale is that, having the government as a major shareholder, you just can't pay one man $100m (even though Hall's unit brings in multiples times his compensation), and you can't run a business that has a large degree of risk attached to it (even though the business itself has returned a profit every year since 1997.
And is Citi getting out of commodities altogether ? Of course not, it's a profitable business, and the firm is actually on the look-out for more (less expensive and less capable) staff in this space. The whole thing is about as ridiculous as President Obama getting the Nobel Peace prize, when he'd only been in office for two weeks before the nomination list closed! Many feel that Citi CEO Vikram Pandit should have taken the (Morgan Stanley CEO) John Mack approach to the US government on this issue (Mack is famously said to have told US Treasury Secretary (then New York Fed President) Tim Geithner to 'get fucked' when he became insistent that Mack sell Morgan Stanley to JPMorgan a few days after Lehman failed).
Reuters quotes Mendon Capital President Anton Schutz, who said: It's sad that it has to happen. They're selling the golden goose that laid the golden egg'. And The New York Times reports that Citi shareholder William Smith has said: 'The message is that Vikram Pandit is not the CEO of the company. You take the only division in the last 10 years that has consistently made money, and you give it away because you can't take government backlash. Nobody in their right mind would do this deal'.
And the news comes as a survey released by the World Economic Forum suggests that the US has lost its status as the top global financial center - coming in third to the UK and Australia. Well, more government-inspired disposals like Citi's Phibro divestiture will only serve to push the US further down the list (and quickly).
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