Citigroup CEO Vikram Pandit joins other chief executives in saying the end of sub-prime crisis closer than the beginning

23 April 2008

Most CEOs of major banks seem to agree on one thing about the ongoing crisis initiated by the collapse of the US sub-prime mortgage market – that the end is nearer than the beginning.

Citigroup CEO Vikram Pandit became the latest in a list of high-flying executives to pronounce such an optimistic, or less pessimistic, state of affairs as he met the company's shareholders at it annual general meeting in Chicago.(Sub prime crisis end in sight says S&P; raises write-down estimates to $285 billion) 

''We are closer to the end'' than to the beginning of the crisis, Pandit said, in his first interaction with shareholders since his appointment after the abrupt departure of previous chief executive Charles Prince. Prince was forced to resign last November as the bank headed for a record fourth-quarter loss of almost $10 billion. On 18th April the company posted a $5.11 billion net loss for the first quarter and announced plans to cut 9,000 jobs. (See: Citibank's sub-prime losses beat combined losses of Indian banking sector)

Pandit's views are quite similar to comments made by JPMorgan Chase & Co. chief executive Jamie Dimon on 16 April, saying that the credit-market freeze is more than half over. Richard Fuld, CEO of Lehman Brothers, Goldman Sachs Group Inc. chairman and CEO Lloyd Blankfein and John Mack, chief of Morgan Stanley, have also offered similar assessments.

Citigroup has reported more than $30 billion of write-downs on sub-prime mortgages, bonds and non-investment grade corporate loans, leading to the worst losses in the New York-based company's history. This has contributed in a massive fall in the bank's stock and recently led to its rival Bank of America overhauling it in terms of market capitalizations.

Citigroup's shares have plunged 55 per cent since the end of 2006 to the lowest in almost a decade, erasing gains made under former Chairman and CEO Sanford Weill, who built the company through a series of acquisitions over 17 years. Weill stepped down in 2003 and tapped Prince as his successor.