CEO Succession Planning Issues at Citigroup: Vikram Pandit's Exit

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The history of Citigroup dates back to 1812, when City Bank of New York was founded with a capital of US$2 million. In 1865, the company joined the US national banking system and changed its name to the National City Bank of New York. In 1913, it was the first contributor to the Federal Reserve Bank of New York. In 1918, it purchased US overseas bank International Banking Corporation to become the first American bank to cross US$1 billion in assets. By 1929, it had become the world’s largest commercial bank.

In the following years the bank introduced many innovative products in its financial services namely compound interest on savings in 1921, unsecured personal loans in 1928, and customer checking accounts in 1936.

In 1955, the bank changed its name to the First National City Bank of New York. In 1967, it introduced its “First National City Charge Service credit card” or “Everything card” which later became known as "MasterCard". In 1976, the bank changed its name to Citibank, N.A. and later to Citicorp. Over the next decade, Citibank became the largest bank in the US. Citigroup was formed when Citicorp merged with the Travelers Group in 1998 to become the world's largest financial services company with approximately US$700 billion in assets. Post merger, the company focused on multiple financial products including private banking, investment banking, mortgages, and credit cards. By the early 2000s, it was a global corporation with a presence in more than 100 locations in North and Central America, the Asia Pacific, Europe, the Middle East, and Africa.

Citigroup grew rapidly in the early 2000s under its CEO Charles O. Prince (Prince). Prince focused on improving Citigroup's relationship with the regulatory bodies in different countries. He gave precedence to resolving the legal and regulatory issues that the company faced. As of 2006, Citigroup was still the largest financial service company in the world. However, some analysts felt that there was a lack of effective risk management practices at Citigroup and that this had led to significant problems for the organization. The company faced major losses after the sub-prime crisis surfaced in the US in 2007. The huge loss resulting from the crisis led to Prince resigning on November 4, 2007, assuming responsibility for the losses of over US$10 billion. Sir Win Bischoff (Bischoff), the then chairman of the company in its European division, was made the interim CEO and Robert E Rubin (Rubin) was made the interim Chairman.

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