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Troubled Citigroup names new boss Troubled Citigroup names new boss
(about 13 hours later)
Citigroup has named the head of its investment banking division, Vikrum Pandit, to be its new chief executive. Citigroup has named the head of its investment banking division, Vikram Pandit, to be its new chief executive.
He will replace Charles Prince, who quit last month after admitting that the bank could be exposed to as much $17bn (£8.3bn) in bad debt.He will replace Charles Prince, who quit last month after admitting that the bank could be exposed to as much $17bn (£8.3bn) in bad debt.
Sir Win Bischoff, who had been the interim chief executive, will become Citigroup's chairman.Sir Win Bischoff, who had been the interim chief executive, will become Citigroup's chairman.
Both men will be under huge pressure to rebuild Citigroup's balance sheet and repair the troubled bank's reputation.Both men will be under huge pressure to rebuild Citigroup's balance sheet and repair the troubled bank's reputation.
It had been speculated that front runners for the job included veteran bankers Fred Goodwin, the chief executive of Royal Bank of Scotland (RBS) and Deutsche Bank boss Josef Ackermann.It had been speculated that front runners for the job included veteran bankers Fred Goodwin, the chief executive of Royal Bank of Scotland (RBS) and Deutsche Bank boss Josef Ackermann.
His deep executive experience and long history as a strategic thinker makes him the outstanding choice to be Citi's CEO Citigroup director Robert E. RubinHis deep executive experience and long history as a strategic thinker makes him the outstanding choice to be Citi's CEO Citigroup director Robert E. Rubin
The boss of the New York Stock Exchange, John Thwain - a former Goldman Sachs banker - had also reportedly been in the frame until he was pinched to head up Merrill Lynch, which has also suffered from heavy exposure to the US sub-prime mortgage crisis.The boss of the New York Stock Exchange, John Thwain - a former Goldman Sachs banker - had also reportedly been in the frame until he was pinched to head up Merrill Lynch, which has also suffered from heavy exposure to the US sub-prime mortgage crisis.
Good choice?Good choice?
Citigroup said that Mr Pandit, who joined the bank less than five months ago, was the "right leader" to steer the bank - one of the largest in the world - back to its former glory.Citigroup said that Mr Pandit, who joined the bank less than five months ago, was the "right leader" to steer the bank - one of the largest in the world - back to its former glory.
"The combination of his deep executive experience and long history as a strategic thinker makes him the outstanding choice to be Citi's CEO," said Citigroup director Robert E. Rubin, who had temporarily stepped into the role of chairman after Mr Prince resigned."The combination of his deep executive experience and long history as a strategic thinker makes him the outstanding choice to be Citi's CEO," said Citigroup director Robert E. Rubin, who had temporarily stepped into the role of chairman after Mr Prince resigned.
In accepting the job, Mr Pandit hinted at substantial restricting at the firm, which has seen about $100bn wiped off its market value this year.In accepting the job, Mr Pandit hinted at substantial restricting at the firm, which has seen about $100bn wiped off its market value this year.
Charles Prince had faced mounting pressure to quitCharles Prince had faced mounting pressure to quit
"Simplifying the company's organisational structure and aligning our businesses and resources with appropriate goals and economic realities will be among our initial priorities," he said."Simplifying the company's organisational structure and aligning our businesses and resources with appropriate goals and economic realities will be among our initial priorities," he said.
But Citigroup's shares sank after the announcement, falling 4.43% to $33.23, suggesting that investors were unhappy with the bank's decision to put a man who has never run a public company in charge of one of biggest and most complex banking organisations.But Citigroup's shares sank after the announcement, falling 4.43% to $33.23, suggesting that investors were unhappy with the bank's decision to put a man who has never run a public company in charge of one of biggest and most complex banking organisations.
"It's disappointing," said William Smith, chief executive of US investment firm SAM Advisors."It's disappointing," said William Smith, chief executive of US investment firm SAM Advisors.
"Pandit is probably a decent manager, but he is a segment manager. He is not a CEO," he added."Pandit is probably a decent manager, but he is a segment manager. He is not a CEO," he added.
Some investors were also disgruntled with the choice of South African-born Mr Bischoff as chairman.Some investors were also disgruntled with the choice of South African-born Mr Bischoff as chairman.
ChallengeChallenge
Mr Pandit is well known on Wall Street for his performance at Morgan Stanley, where he worked for two decades until 2005 and became president of that bank's investment banking unit.Mr Pandit is well known on Wall Street for his performance at Morgan Stanley, where he worked for two decades until 2005 and became president of that bank's investment banking unit.
He left to set up a hedge fund call Old Lane, which was bought by Citigroup earlier this year for $800m and Mr Pandit moved across to head up the firm's alternative investments, later taking on the bank's whole capital markets unit.He left to set up a hedge fund call Old Lane, which was bought by Citigroup earlier this year for $800m and Mr Pandit moved across to head up the firm's alternative investments, later taking on the bank's whole capital markets unit.
But neither he nor Mr Bischoff have experience in consumer banking, which accounts for half of the group's profits and has seen dull results, according to analysts.But neither he nor Mr Bischoff have experience in consumer banking, which accounts for half of the group's profits and has seen dull results, according to analysts.