The shuffle Citi needs

July 9, 2009

Citi CEO Vikram Pandit keeps moving around the deck chairs, but the one chair he still won’t move is his own.

The latest management shuffle at Citi seems more designed to appease the federal government–the bank’s largest shareholder–than anything else. Moving people in and out of jobs gives the appearance that Pandit is really shaking Citi up. (Here’s a report from Reuters on the latest management shuffling).

But the reality is things can’t really change at Citi until Pandit leaves the stage. Of course, the problems at Citi long predate Pandit’s arrival. But it’s hard to see how Citi will revive itself without an entirely fresh management team and board.

Frankly, what Pandit should be more focused on right now is cleansing the bank’s balance sheet of toxic assets. Citi should be one of the biggest sellers of toxic assets to the dramatically scaled back PPIP.

It also would be nice to see Pandit take up my idea of donating toxic assets to needy charities–a move that could allow the bank to offset some of the inevitable writedowns with a tax break.

On that score, the most puzzling shakeup is the departure of Gary Crittenden, Citi’s former CFO, who earlier this year became chairman of Citi Holdings. That’s a new entity set up by the bank to essentially become the holding company for some $300 billion in toxic assets and other operations the bank is looking to spin-off.

In the press release, Pandit says Crittenden is leaving the bank to move to Utah to spend more time with his family and pursue other interests.

I’m not sure what to make of that. On the one hand, it sounds like Crittenden has simply had enough and wants a break from things–something that’s certainly understandable.

But one also wonders if Crittenden’s departure signals some internal dissent at Citi over the handling of its toxic asset problem.

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