Vikram Pandit’s winding up his 100-day, globetrotting honeymoon as Citigroup’s would-be savior by yesterday writing a love note to all employees to assure them their bank isn’t running out of cash, and doesn’t need any more bailouts.
Citi suffered a devastating stock rout Tuesday, with shares tumbling to a nine-year low, after a top Middle East money man – Sammer al-Ansari of Dubai International Capital – said Citi’s subprime mortgage and CDO (collaterized debt obligations) losses could be so steep that even oil-rich Gulf investors couldn’t bail out the bank as they’d done months earlier. Dubai’s position on Citigroup shares, if any, wasn’t known.
Merrill’s respected bank analyst Guy Moszkowski also fueled the stock rout with a report that Citi’s $18 billion writedown in the fourth quarter could double in the coming quarter.
As part of his damage control, the new chief of Citigroup e-mailed a letter to Citi’s global employees defending his bank’s capital position, stressing that it would be enough to get Citi through its makeover in the coming year.
In his “Dear Colleagues” memo, Pandit wrote, “While we face a challenging economic environment in many segments of our operations, fundamentally we remain strong.”
Putting a positive spin on the bailout money the bank has received, much of it from sovereign wealth funds, Pandit said that the decision to increase “capital by more than $30 billion” was part of the bank’s “decisive steps” and that capital is at “a level that was stressed-tested against a number of economic downturns.”
Even so, Pandit – who said he’s been flying around the world in the past three weeks to inspect its key cash-cow offices: London; Mexico City; Warsaw, Poland; Istanbul, Turkey; Shanghai; Beijing; Hong Kong; and Seoul, South Korea – said that “we anticipate that divesting some of our peripheral businesses will further contribute to our capital base.”
Pandit, who unlike his predecessors, has pulled in outside crisis publicists, such as Robinson, Lehrer, Montgomery to help, also promised: “I plan to be in touch regularly with updates.”
Despite his optimism, Pandit did make a nod to the potential troubles in store, writing: “Balancing this [optimism], of course, are the ongoing concerns around certain assets such as leveraged loans and parts of the mortgage portfolio.”paul.tharp@nypost.com