Left: Citigroup Inc's new chairman Sir Win Bischoff. Right: Vikram Pandit, new Citigroup chief executive officer.

Citigroup Inc. has named Vikram Pandit its new chief executive officer (CEO) and a member of the board of directors, the board announced Tuesday, saying the appointment is with immediate effect.

Sir Win Bischoff, who has been running Citi as interim CEO since November 4, will succeed Robert Rubin as board chairman.

Rubin returns to his previous duties as a member of the Citigroup board and chair of executive committee.

'Right leader'

"Vikram has earned a reputation as one of the most respected leaders in the financial services industry," said Rubin.

"The board is unanimous in its conviction that, as part of a new generation of executives in this industry, Vikram is the right leader to build on the exceptional strengths of this great company and take the steps necessary to lead us forward."

Pandit and Bischoff step into slots left by Charles Pink who was ousted from Citi last month after the bank's US$8 billion to US$11 billion subprime exposure was announced.

The appointment is a pro-motion for Pandit who was most recently chair and CEO of Citi's Institutional Clients Group, comprising the divisions, Citi Markets & Banking and Citi Alternative Investments.

He came to Citi in 2007 after the bank acquired his hedge fund Old Lane, LP for US$800 million.

Pandit was the fund's founding member and chairman. He also worked with Morgan Stanley for more than two decades, prior to forming the fund.

With Pink's departure, the board opted to split the roles of chairman and CEO.

Citi's subprime writedowns are now expected to top US$17 billion, and the bank has turned to the Abu Dhabi Investment Authority for liquidity support.

The authority bought 4.9 per cent of the bank for US$7.5 billion at the end of November. The deal was just below the 5.0 per cent threshold that would have triggered a central bank review.

Pandit enters the picture during a period of friction with shareholders pushing for the bank to spin-off some of its businesses, while the board is adamant that it will not break up the bank.

There is also mounting criticism of Citi for turning to an Arab state for rescue.

The new CEO's charge is to restore the bank's profitability and reputation.

business@gleanerjm.com