JM Financial is Pandit's first public investment since Citi ouster: All you need to know

Former Citigroup Chief Executive Officer Vikram Pandit is buying a stake in India’s JM Financial and taking a leadership role as it seeks to set up a bank in the country. The deal is Pandit’s first public investment since Citigroup directors ousted him as CEO in October 2012.

The Business Standard had in March reported that Pandit was in preliminary talks with government officials and several PE funds to become a co-applicant for a banking licence in India.

[caption id=“attachment_790791” align=“alignleft” width=“380”] Pandit has not joined any institution since resigning from Citi[/caption]

Pandit had not joined any institution since resigning from Citi but remains a director on the board of the Institute of International Finance. Pandit would now make a strategic investment in JM Financial which will issue over 1.16 crore warrants worth about Rs 22.6 crore to him. An integrated financial services firm, JM Financial would nominate Pandit as the non-executive chairman of its proposed banking venture.

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Vikram Pandit abruptly stepped down as CEO of Citigroup in October 2012, surprising Wall Street, after steering the bank through the 2008 financial crisis and the choppy years that followed. Under him, Citigroup posted five consecutive quarterly profits and in May 2011, the board awarded him $23.2 million as a retention bonus.

Pandit also relinquished his seat on Citi’s board of directors. His departure followed a clash with the US bank’s board over strategy and performance.

“Pandit’s resignation came after a series of missteps left some directors feeling that the company wasn’t being managed effectively and that the board wasn’t kept adequately informed, the Wall Street Journal had reported last year.

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The news of his departure shocked Wall Street, a day after the bank reported strong third-quarter earnings. Pandit is credited with slimming the bank by selling businesses, removing it from government ownership after a bailout in 2008 and righting its balance sheet after billions in losses on bad mortgage investments made before he took the helm.

But Pandit’s massive pay packages raised the ire of investors. Fifty-five percent of the shareholders objected to deals including the $15 million that Pandit received last year, in addition to $10 million in retention pay. He had accepted a token $1 in compensation in 2010.

Pandit joined Citigroup in 2007 when the hedge fund he founded was acquired by the bank. He quickly rose to CEO in December 2007. Earlier, he had ascended to head of investment banking at Morgan Stanley before leaving in 2005 to form the hedge fund. A naturalized citizen, Pandit lives in New York with his wife and two children.

A native of India, Pandit attended Columbia University at 16 and completed a bachelor’s degree in three years. He earned a doctorate in finance in 1986.

He faced harsh criticism after Citigroup took $45 billion in government bailout money in the 2008 credit crisis. In December 2011 Pandit announced the company would eliminate 4,500 jobs to cut costs. The cuts represented about 1.5 percent of its global workforce of 267,000. When he was first hired in 2007, the company had 375,000 employees.

With inputs from AP