Citigroup Inc Chief Executive Vikram Pandit resigned abruptly on Tuesday, effective immediately, a shock change at the top of the bank just one day after a surprisingly strong quarterly earnings report.

A statement from Chairman Michael O'Neill said Michael Corbat, previously chief executive for Europe, Middle East and Africa, would succeed Pandit as CEO and as a board member.

Within minutes of the bank's announcement, Pandit's name was gone from Citigroup's website.

Chief Operating Officer John Havens, a long-time associate of Pandit, also resigned.

Citigroup's stock tumbled 2.5 percent in premarket trading following news of Pandit's departure, but later the shares were up 20 cents to $36.86 in early trading on the New York Stock Exchange.

Investors questioned why Pandit would leave now after keeping the bank afloat during the financial crisis and getting it back on a firmer footing.

"I would have expected he wanted to stay around and see some of the fruits of his labors there," said Peter Jankovskis, co-chief investment officer of Oakbrook Investments LLC in Lisle, Illinois.

Pandit's resignation comes after a series of high-profile defeats this year. In March the Federal Reserve rejected the bank's capital plans after a stress test; Pandit had led analysts and investors to believe the dividend-raising plans would be approved.

Last month, Pandit agreed to a low sale price for his bank's stake in the brokerage operated by Morgan Stanley. Citigroup had to take a $4.7 billion charge in the third quarter to write down the value of that stake.

Citigroup shares rose sharply on Monday after the bank reported third-quarter results that were much better than analysts expected.

The one-two punch of the results and then Pandit's exit point to what analysts say has been a years-long unsettled atmosphere around the bank.

"What Pandit and Havens did was increase the uncertainty around Citi," said Matt McCormick, banking analyst and portfolio manager at Bahl & Gaynor in Cincinnati, Ohio. "There's a perpetual cloud of uncertainty surrounding Citigroup. There's always turmoil ... that's had to affect the stock price."

EXPERIENCE QUESTIONS
Pandit's resignation revived questions that were asked from the day he took the job: whether he had the right experience to lead Citigroup in the first place.

Born in Nagpur, India, the 55-year-old Pandit obtained two electrical engineering degrees and a doctorate in finance from Columbia University. He joined Citigroup in July 2007 when the bank acquired his hedge fund and private equity firm, Old Lane Partners LP, for $800 million. Citigroup had to shut down Old Lane the next summer, an early black mark for the executive.

Critics later charged that Pandit was too timid, perhaps even too academic, to run a big consumer bank.

"He was not beloved by Wall Street. He was thrust into that position - he's a hedge fund guy," McCormick said.

His successor, Corbat, has held a number of senior roles at Citigroup, including running Citi Holdings, the unit established to house businesses and assets the company wants to shed.

A fixed income salesman by training, Corbat started out at Solomon Brothers in 1983. More recently, he has been credited with successfully restructuring some of Citigroup's consumer and credit card units.

News: The Daily Star/Bangladesh/17th-Oct-12

Two out of nine new banks have failed to submit their supporting documents with their applications for licences within deadline which passed yesterday, Bangladesh Bank officials said.

The two banks, NRB Global Bank and Madhumati Bank, have sought for extension of six months to meet BB's regulations for setting up new banks.

“The central bank will decide on the time extension at its board meeting,” a BB official said yesterday.

“We need more time to arrange the money required as paid-up capital. We hope to get the extension,” Nizam Chowdhury, proposed chairman of the NRB Global Bank, said yesterday.

Chowdhury said initially he thought Tk 200 crore would be needed as paid-up capital, but later found the figure was Tk 400 crore.

Sheikh Fazle Noor Taposh MP who is a sponsor of the Madhumati Bank could not be reached for comments.

In April, the BB gave the go-ahead to nine new private banks, all linked with either lawmakers of the ruling Awami League and Jatiya Party or influential persons, despite opposition from different quarters.

The BB issued a 'letter of intent' for the new banks on April 17 and asked them to submit all supporting documents within a six-month timeframe.

Sponsors of the banks will also have to ensure they have arranged minimum Tk 400 crore needed as paid-up capital.

The minimum shareholding stake of each sponsor shall be Tk 1 crore, with the maximum being 10 percent or Tk 40 crore of the Tk 400 crore paid-up capital.

The seven banks which managed to meet the deadline are: South Bangla Agriculture and Commerce Bank, Midland Bank, Farmers' Bank, Union Bank, Meghna Bank, NRB Commerce Bank and NRB Limited.

“We'll now scrutinise the applications, including the eligibility of the sponsors and sources of their money,” said the BB official. Their credit reports, too, will be examined, he said.

Upon receiving the formal licences, the banks will have to issue public shares within three years from the date of commencement, with the public issues at least equal to the sponsors' share amount.

At present, 47 public, private and foreign banks are in operation in the country, in addition to the 29 non-bank financial institutions.

News: The Daily Star/Bangladesh/17th-Oct-12

The Inter-national Finance Corporation (IFC), a member of the World Bank Group, launched a training initiative for financial sector executives in Bangladesh to help them step up support for SMEs so they can expand operations and contribute to the country’s economic growth.

The programme, developed in collaboration with the Austrian Development Bank, Oesterreichische Entwicklungsbank, is training bank executives in strategy, market segmentation, product design, customer management, credit-risk management, and information-management systems.

The SouthAsia Enterprise Development Facility, managed by IFC, in partnership with the UK government and the Norwegian Agency for Development Cooperation, is supporting this initiative, said an IFC press release on Monday.
Data from the World Bank Enterprise Survey shows that about 35 per cent of Bangladesh’s small and medium enterprises (SMEs) identify access to finance as a major constraint to business.

Difficulty with payment services, deposit mobilisation, and investment financing are some of the impediments. IFC’s training programme helps address these problems by guiding bankers on how to serve the SMEs effectively.

“IFC is committed to developing the potential of small businesses in Bangladesh as they are the engine of economic growth,” said Rehan Rashid, IFC Senior Country Officer.

He added: “This programme aims to work with the financial sector in Bangladesh to expand its services into new markets and reach more small entrepreneurs.”

The training was designed by IFC’s Global Small and Medium Enterprises Banking Program to help banks in middle-income and developing countries target the sector opportunity and expand this line of business.

IFC has conducted similar trainings in East Asia and the Pacific, Eastern Europe and Central Asia, Latin America, the Middle East and North Africa, and Sub-Saharan Africa, where IFC has had a significant impact in bolstering small and medium enterprises.

News: The Daily Independent/Bangladesh/16th-Oct-12

The central bank warned Monday that it will not accept any indifferent attitude by private banks while accepting or buying 'inland bills' of the garment manufacturers or those supplying accessories to the country's export-oriented apparel industry. “No banks should avoid accepting or buying inland bill purchase (IBP) citing any excuse of Hall-Mark loan scam,” said Bangladesh Bank Deputy Governor SK Sur Chowdhury while briefing the journalists after a meeting with textile and apparel industry leaders.

“Most of the private banks have become more conscious after the Hall-Mark scam which prompted them to be choosier,” said the Deputy Governor, instructing the bank MDs who attended the meeting, to purchase the IBP as usual.

The central bank held a meeting with leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BMEA) and Bangladesh Textile Mills Association (BTMA) at its board room to resolve banking problems the industry is facing.

According to sources, the business of the supply chains of the major export sector, especially the garment (RMG) industry, has been highly affected because of the Hall-Mark loan scam as most of the commercial banks are reportedly reluctant to finance businesses through 'inland bills' in the recent days.

Bangladesh Bank in a circular on July 11 reduced the power of purchasing IBP by the branches of banks as the banking regulator detected irregularities in disbursement of loans against opening of letters of credit. The regulator had found a significant rise in collecting funds through preparing accommodation bills against LCs, without any real business transaction.

The trend of bill purchase increased as those transactions were handled at branch level, with the principal branch kept in the dark.

Therefore, the regulator asked the banks branches to take permission from their principal branch before purchasing such accommodation bills.

Bangladesh Bank Deputy Governor, however, assured the entrepreneurs that they will get all cooperation regarding IBP if the bills were genuine. “They will purchase bills as usual which they did earlier,” asserted the Deputy Governor.
Association of Bankers’ Bangladesh (ABB) president Nurul Amin, who attended the meeting, also assured that all the banks, including the Sonali Bank, would purchase IBP and there will be no problem. “Relations between banks and clients should not be hampered,” Amin said.

BGMEA president Shafiul Islam Mohiuddin said they were assured by Bangladesh Bank about IBP purchase adding that the central bank is now more vigilant and will monitor the issue more seriously.

“The IBP will be accepted on bank-client relationship basis. We brought the issues those were not being addressed by our banks to the Bangladesh Bank,” BGMEA president said.

The meeting was attended among others by BKMEA acting president Mohammad Hatem, BTMA president Jahangir Alamin and BGMEA vice president Siddiqur Rahman.

News: The Daily Independent/Bangladesh/16th-Oct-12

Khandker Ibrahim Khaled, Chairman of Bangladesh Krishi Bank, speaks at a workshop at the Bankers’ Forum at CIRDAP auditorium in Dhaka Monday.

News: The Daily Sun/Bangladesh/16th-Oct-12