Citi: Apparently, The Street Never Really Liked That Pandit Guy Anyway

Don’t let the door hit you on the way out!

Pundits are piling on a bit this morning following the news that Vikram Pandit suddenly stepped down as CEO of Citigroup (C). And the Street, after some initial consternation about the abrupt change in leadership, appears gleeful. Shares are up about 1% on strong volume, and had surged higher earlier in the morning. The Wall Street Journal is reporting that Pandit’s departure was spurred by disagreements with the board over the company’s strategy and performance — the company’s institutional clients group was apparently one of the sore spots.

Forget the fact that investors appeared thrilled just one day ago by Pandit’s leadership, as the bank’s third quarter earnings beat the Street’s expectations.

Today’s sentiment is: we never liked that guy anyway!

(Ah well, if you want a friend on Wall Street, get a dog.)

Sheila Bair, former chairman of the Federal Deposit Insurance Corp. (FDIC). Via Bloomberg News.

Some people, to be sure, have been criticizing Pandit for more than a few hours. Sheila Bair, the former chairman of the FDIC, attacked the CEO in her book, “Bull by the Horns.”

Bair told Bloomberg Surveillance today that “this was a very positive move and the board discharged its responsibilities and I think they should be commended.”

“I did have concerns about Mr. Pandit’s qualifications to serve as CEO of the largest commercial bank since he’d never been a commercial banker. Also, in my interactions with him–on the bailout initiatives, the ring-fence with the original Wachovia situation–I saw not a good ability to execute, not a good ability to have information, which I thought was pretty basic for anyone managing a large institution�this was a concern to me.”

Others also praised the board, saying Pandit never fit comfortably into the CEO role, as he didn’t have the kind of commercial banking experience that would allow him to turn Citi back into a more traditional bank following years of too-risky trades.

“Citi now to be run by traditional bankers�we think this could be an intermediated-term positive,” Wells Fargo Securities analyst Matthew Burnell wrote. “Corbat’s elevation strikes us as a positive for Citi, as it brings an experienced banker into the CEO’s role.”

According to Evercore analyst Andrew Marquardt, Pandit’s departure was “related to a number of missteps, in our view, including on capital deployment (recall ’12 CCAR where Citi was not approved for deployment), incentive compensation issues (recall non-binding vote by shareholders on Pandit’s pay), and still mixed results and outlook (recall we’ve been skeptical of Pandit’s long-term goals and nearer term have been below consensus).”

Investors could benefit in the long term, but it’s not a slam-dunk, Marquardt said.

“Overall, likely adds to near-term uncertainty but may be positive longer term. While management change may be positive longer-term given mixed view of Pandit, this likely adds more uncertainly near- to medium-term given potential greater uncertainty around timing/degree of capital return story for Citigroup, as well as near- and longer-term hurdles/opportunities.”