Vikram Pandit Tells DC Ethnic Media: Citigroup is Committed
New America Media, News Report, Khalil Abdullah, Posted: Nov 25, 2009
WASHINGTON, D.C. – By its own declaration, Citigroup is the “single largest foreign direct investor in the financial services industry in India,” so it was no surprise that Vikram Pandit, the company’s CEO, would be in Washington, D.C., on the approaching eve of Indian Prime Minister Manmohan Singh’s meeting with President Barack Obama.
Though U.S.-China relations dominated recent international news coverage due to Obama’s November China visit, India’s importance to U.S. Asia policy is underscored as Singh’s arrival marked the first head-of-state dinner hosted by the Obama White House.
Pandit, who is near completing his second year as Citigroup’s CEO, has survived stockholder disenchantment with Citi’s performance and withering critiques by those advocating an increase in the power of bank regulators. Yet, despite these pressures and his day-to-day duties, Pandit took time on November 20 to sit with representatives of Washington, D.C.’s ethnic media in a meeting arranged by Maria Cardona, a principal of Dewey Square Group and New America Media board member. Pandit’s message was one of personal and corporate commitment to local communities.
“This is the time the community needs us,” Pandit said, referring to the devastating meltdown of the real estate market and double-digit unemployment. He described Citi programs designed to provide a measure of relief to customers beset by financial hardship. Pandit said Citi has kept 12 out of every 13 mortgage of its holders in their homes by modifying over $80 billion in mortgages. “It’s in nobody’s interest to have people leave their homes,” he said.
Pandit said he understood that “it’s not easy for proud people to say that they can’t pay their mortgage.” Non-profits and other organizations long-rooted in local communities, together with ethnic media, can provide an effective conduit for critical information about Citi’s programs and policies. When asked by one attendee what the first step should be for a homeowner in dire straights, Pandit responded, “Pick up the phone and call us.”
Pandit also cited a Citi initiative that provides a reduction on mortgage payments for customers who suddenly face unemployment. “If you lose your job, you can pay [as little as] $500 a month; you can stay in your home,” Pandit said. While surely welcomed by the newly unemployed, this and other short-term relief measures are likely unsustainable over the long haul. Citi needs that mortgage revenue and more in order to return to consistent profitability, in part to repay the $45 billion it received from the federal government under the Troubled Asset Relief Program. Thus, Citi and Pandit are asking the same question as are critics of the key shortcoming of Obama’s stimulus plan: Where are the jobs? Without an improved jobs outlook, customers will be hard pressed to stay current on their mortgage obligations.
Additionally, small and mid-size businesses, typically engines of job growth, are being squeezed by their inability to secure loans. Washington Hispanic publisher Johnny Yataco was skeptical of Citi’s capacity to be more flexible in its loan policies, pressing Pandit to address the public perception that “the banks are not lending.” Pandit rejoined that a large percentage of small business loans were generated by small banks that are facing difficulties with their commercial real estate portfolios.
Other systemic issues have also contributed to a tight lending market, including what Pandit described as contraction in the “shadow banking industry,” citing the bank holding company, CIT, as an example. Though it offers consumer banking through subsidiaries, CIT is better known as lender to small businesses, especially retailers. In November, it filed for Chapter 11 protection from creditors while seeking to reorganize.
Given the overall uncertainties in financial markets, Pandit said Citi is not unlike every other major bank. “We’re searching for the new normal,” he said. In other ways, though, Pandit has sought to re-engineer Citi’s mission. He said of the four largest U.S. banks — J.P. Morgan, Wells Fargo, Bank of America and Citi--his is the only one that has downsized. “We’re a very different company than we were 18 months ago,” he said. Pandit said Citi has taken about $16 billion, or about 25 percent, out of its cost structure.
Pandit said his aim is to determine what Citi does best. After decades of attempting to synthesize a financial entity that touched on virtually every aspect of finance, Pandit is intent on paring Citi’s operations to what he describes as its core mission. That includes wealth management for the middle class in emerging economies, and India’s is potentially one of the most lucrative. With a population now of over one billion people, India’s 300-million person middle class is near equal to the population of the United States. Though Pandit immigrated to the United States from India when in his teens and pursued advanced degrees at Columbia University, he is intimately familiar with the country of his birth. In 2008, he was a recipient of the Padma Bhushan Award, one of India’s highest distinctions, for his accomplishments in trade and industry.
Still, though Pandit said Citi is “the global bank,” one active in “109 countries around the world,” he is keen on restoring the Citi brand in the United States. Riding out America’s mortgage crisis will continue to be a central concern, so Pandit views non-profits across the country as important partners. “Financial education is a big part of what we’re investing in in our communities,” Pandit said.
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