Pandit says Citigroup now ‘a different company’

August 10th, 2011 - 12:34 pm ICT by IANS  

Washington, Aug 10 (IANS) Citigroup’s Indian American CEO Vikram Pandit has reassured employees that notwithstanding the decline in its stock price, the bank was healthier than it was before the 2008 meltdown and its fundamentals were in good shape.

“Although the decline is difficult to watch and naturally reminds all of us of what happened several years ago, there is little similarity between now and then in both drivers and implications,” Pandit told senior managers in a voice mail.

Similar comments came from the Bank of America CEO Brian Moynihan as shares of the two giants and other US financial firms bounced back Tuesday from their biggest single-day drop in two years.

Citigroup plunged 16 percent Monday to trade at half its book value, but gained back nearly 14 percent Tuesday. BofA shares too jumped 17 percent after Monday’s 20 percent drop.

“Not only is it a fundamentally different time, but we are a fundamentally different company,” Pandit said in his message, adding that the bank has been profitable for six quarters, is making investments in every region, has derisked its balance sheet and shed $519 billion in non-core assets.

“These actions have contributed to the unquestionable financial strength Citi has built over the past several years,” he said, noting the bank’s strong capital ratios and liquidity base.

Pandit said what has changed this time around is that investors are looking for “return of capital” and not “increased capital levels.”

“The companies which have fared better relatively are the ones who have announced plans to return capital to shareholders and our goal is still to return capital next year,” said Pandit.

Pandit told staff that the recent sell off was a call to action. “Call on your clients. Let them know about the unparalleled resources we have to help them navigate through these challenging times. This is the time to remind them that we have been with them for 200 years and will be there for them day in and day out.”

“The most important point to remember is that our company remains financially strong,” Moynihan wrote in his memo to employees. “We do not know how long this period of uncertainty will continue,” he wrote, “but we have weathered challenging times before and we will now.”

(Arun Kumar can be contacted at arun.kumar@ians.in)

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