Citigroup's Crisis Chief Finds Home in Finance's New Frontier
July 21 2018 - 9:29AM
Dow Jones News
By Telis Demos
A decade after the financial crisis , The Wall Street Journal
has checked in on dozens of the bankers, government officials,
chief executives, hedge-fund managers and others who left a mark on
that period to find out what they are doing now. Today, we
spotlight former Citigroup CEO Vikram Pandit and the former
chairman of the Commodity Futures Trading Commission, Gary
Gensler.
Vikram Pandit spent the financial crisis taking the heat for the
sins of Wall Street's past. Now, he's focusing on its future.
Mr. Pandit became Citigroup Inc.'s chief executive on the eve of
the financial crisis in December 2007 and abruptly resigned nearly
five years later when it became clear the board was about to
replace him with current CEO Michael Corbat. In the years since, he
has invested in a number of emerging financial firms and fintech
startups in part through his Orogen Group, a Berkshire
Hathaway-style holding company for financial-services
investments.
"It wouldn't have been my choice to leave that abruptly, but it
was the right time for me to leave," he said in a recent
interview.
Mr. Pandit oversaw a series of bruising maneuvers to keep the
unwieldy megabank afloat, including a massive government bailout,
the contentious sale of its asset management business, the cleaving
off of a "bad bank" holding company and the remaking of the bank's
board at the behest of the U.S. Treasury.
Most observers agreed that shrinking Citigroup and refocusing it
on corporate and retail banking -- Mr. Pandit's core strategy --
were the right moves. But with the stock price at a fraction of its
peak and taxpayers on the hook for billions of dollars, his
execution was under constant scrutiny.
"I remain proud of everything I accomplished," he said. "The
bank has been methodically executing on the strategy put in place,
and it's working."
Following his exit in 2012, Mr. Pandit was free to embrace his
reputation as a banking wonk, which was sometimes used against him
in the thick of the crisis.
An engineer by training, Mr. Pandit began his finance career as
an electronic stock-trading pioneer at Morgan Stanley, which still
boasts the top franchise in that business. Under his watch,
Citigroup started a Palo Alto, Calif., venture-capital unit to
invest in, and learn from, startups.
Shortly after leaving Citigroup, Mr. Pandit, 61, began investing
in emerging financial firms, including a nonbank lender in India.
He also has backed several fintech startups, including Coinbase
Inc., NerdWallet Inc., CommonBond Inc. and TransferWise Ltd. He was
the only banker interviewed in a "60 Minutes" feature on fintech in
2016.
For a few years, Mr. Pandit was involved in a consulting venture
with academic economists including Steven Levitt of "Freakonomics"
fame. In 2016, Mr. Pandit entered into a partnership with Atairos
Group, the $5 billion investment vehicle backed by Comcast Corp.,
to create Orogen.
Orogen has provided some $100 million in capital to a new
credit-card lender, Fair Square Financial LLC, which offers the
Ollo card. It also invested $108 million in an
information-technology-services firm, Virtusa Corp., that helps
banks and others develop digital applications. Virtusa's market
value has increased by 70% since Orogen invested last year.
Mr. Pandit said banks and other established financial firms need
to quickly embrace new technologies if they want to avoid the fate
suffered by, for example, traditional retailers as e-commerce
emerged.
"I lived through the dot-com era and watched what happened in
other industries," Mr. Pandit said. "Changes are needed because
regulation has created more of a level playing field in banking and
finance, and there is competition from other business models."
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
July 21, 2018 09:14 ET (13:14 GMT)
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