Published in Portfolio
Profile: Vikram Pandit, New Prince of City
Published by Current on 2007-12-11
Indian-born Vikram Pandit, who was appointed today as Citigroup's next chief executive officer, is often characterized in financial circles as a quiet and modest person but one with exceptional smarts. He's all those things, to be sure, but there's another side of the 50-year-old Pandit that few people outside his closely knit circle of friends and family members know.
For example, Pandit is an educator. Pandit is also a philanthropist. And, notwithstanding his modesty, Pandit is an extraordinarily ambitious man who carefully plotted his career in the high-stakes world of big-league finance almost from his undergraduate days at Columbia University, from where he received a bachelor's degree in mechanical engineering in 1976, and a doctorate in finance in 1986.
One anecdote illustrates Pandit's penchant for long-term thinking. In January 1990, on the day after he was made a partner at Morgan Stanley after distinguishing himself as a whiz-kid in equity financing, the 33-year-old Pandit was having brunch with another freshly-minted partner at a well-known eatery on Madison Avenue, not far from Pandit's apartment.
"Vikram was already talking about how we might develop second-line managers who would one day be our core team - when he'd take over Morgan Stanley," Pandit's brunch companion at the brunch recalled yesterday. "Make no mistake about it: Beneath that amiable nature - which is genuine, by the way - there's a steely personality. Mathematically, quantitatively, and strategically, he's very smart. He's also very astute at corporate politics, although he rarely shows his hand. Vikram has always been singularly focused on reaching the top."
He very nearly did at Morgan Stanley, but lost out when then CEO Philip J. Purcell named Stephen S. Crawford and Zoe Cruz as co-presidents of the firm with responsibilities for its institutional securities, individual investor and investment management groups. That meant Pandit, who was president and chief operating officer of Morgan Stanley's institutional securities and investment banking business and a member of the firm's management committee, was effectively denied the chance of succeeding Purcell, Moreover, Pandit would have had to report to Cruz, a bitter foe. (Cruz resigned as co-president last week in the wake of disclosures that Morgan Stanley's losses in subprime mortgages would exceed $3.7 billion.)
At Morgan Stanley, Pandit's private feud with Cruz was quite possibly one of the few instances where there was open bad blood between him and a colleague. A limousine driver who often chauffeured Pandit says that while most company executives - particularly the younger ones - would frequently grumble about their bosses, he never once heard anyone speak ill of Pandit. At the same time, the driver says, he never once heard Pandit run down anyone, preferring instead to ask the driver about his family - but not necessarily engage in small talk.
From Morgan Stanley, Pandit dove into the murky world of hedge funds, and became a founding member and chairman of the members committee of Old Lane, LP. He took with him such loyal Morgan Stanley lieutenants as John P. Havens, who ran the institutional equity business. Those who know both men well say that they work in tandem issues such as on hirings and firings.
"Vikram would never look at a person and tell him that he's been fired," one investment banker said. "I think that's because he's genuinely decent and doesn't like confrontation. So all the firings are done by Havens. In that sense, Vikram is very Indian in his sensibility - even though he hasn't lived in India since his teens."
Pandit came to the United States at the age of 16 because his father was posted by an international organization. Coming from their home city of Bombay, now Mumbai, Vikram and his sister - who's married and now lives in Connecticut - were brought up in a traditional Indian household, where Hindu prayers were recited faithfully, and the children were exhorted to be both ambitious and always display humility. The parents would perform poojas, or Hindu rituals, at home, and celebrate such traditional Hindu milestones as Diwali, the "Festival of Lights."
Friends say that even at family gatherings - which include Pandit's wife Swati and their two teenaged children, Rahul and Maya -- Pandit rarely talks about his accomplishments. Pradeep Kashyap, a former Citibank executive and currently executive director of the American India Foundation, says that if you didn't know who Pandit was, you'd never hear it from him.
Pandit was persuaded to become a trustee of the foundation, which was started by former President Bill Clinton President Bill Clinton to raise funds for victims of the Gujarat earthquake in India. The foundation has since raised tens of millions of dollars not only for Gujarat but also for education, technical literacy, and entrepreneurial projects in India. The foundation's trustees typically donate at least $100,000 a year each, and also help raise funds.
But Pandit specifically asked that his money be designated as part of the foundation's endowment, and not be spent on programs. That may well be because Pandit himself supports major charitable projects in Shegaon his native state of Maharashtra in western India, and may not have wanted to appear to compete with the American Indian Foundation.
Notwithstanding his India connections, Pandit is not particularly considered an "emerging markets" expert - despite the Indian economy's stellar growth of 7 to 9 percent annually in recent years.
"Surprisingly, Vikram has far fewer personal relationships within the higher echelons of Indian business," one friend said today. "But his political instincts are like those of Chanakya, the legendary Indian political savant. I bet that if Vikram were ever to return to India, he'd do very well in politics. Except, of course, that he's shy in front of crowds."
Since his arrival at Citigroup last April, Pandit has headed the global financial-services institution's alternative investments group. Citigroup bought out his $4.5 billion hedge fund, Old Lane Partners, which he started only two years ago, for $800 million. At that time, few people could have foreseen that Citigroup's CEO, Charles O. Prince III, would be gone by early November as the bank's exposure in the unraveling sub-prime market was revealed to be staggering - so staggering that Citigroup is expected to take at least $13 billion in write-downs.
"This is a great day for Indian professionals," Bidyut Sen, managing partner of Sengor Capital in New York, said this afternoon. "Citigroup's gain is Morgan Stanley's loss."
One advantage Pandit enjoys is that he's the beneficiary of a long tradition of strong bonds between the Indian Subcontinent and Citigroup. This tradition dates back more than four decades, when what was known as Citibank accelerated the hiring of bright finance and management executives from India and Pakistan, two of the institution's largest components in the global market. Many of these hires were graduates of prestigious Indian schools such as the Indian Institutes of Technology, and the Indian Institute of Management. Indians and Pakistanis today are the dominant nationalities among Citigroup's high-level management, along with Americans, of course.
For example, Ajay Banga, who joined the institution in 1996 after serving as PepsiCo's marketing director in his native India, is chairman and chief executive officer of Citi's international consumer group. Similarly, Vikram Atal is chairman and CEO of Citigroup consumer cards.
Indeed, some of these executives rose so rapidly through the ranks that they were often touted as possible CEO candidates. For example, Victor Menezes, an IIT alumnus who was hired by Citibank's then chairman Walter Wriston, soon became a protege of Wriston's successor, John S. Reed. It was Reed who designated Menezes as the bank's in-house, one-man think tank, and elevated him to vice chairman of the entire institution, and CEO of banking operations. At the time, the widespread speculation within Citicorp was that Reed was grooming Menezes to succeed him.
Menezes's fortunes steadily declined after Citicorp merged with Sanford Weill's Travelers Group in April 1998. Reed and Weill became co-CEO's under the new arrangement, and their relationship quickly soured. After Reed left, Weill at first embraced Menezes, who took him for a tour of India. While in India, Menezes even arranged a special renewal of marriage vows between Weill and his wife, the former Joan Mosher. The ceremony was replete with the bridegroom riding on a horse, Indian style, and bedecked with colorful beads and attired in brocades.
Menezes was instrumental in persuading another top Citigroup executive, Pradeep Kashyap of New Delhi, to join AIF as executive director. The foundation has since raised tens of millions of dollars not only for Gujarat but also for education, technical literacy, and entrepreneurial projects in India.
Kashyap was among several departures of high-level Subcontinental executives at Citigroup. One was Jerry Rao, who headed Citicorp's operations in India, and later held high-level positions in Europe and the U.S. Rao now heads a successful technology company in India, Mphasis. Still another star who left was G. S. "Rana" Talwar - also a John Reed protege, and a golfing partner - who exited in order to become chairman and CEO of Standard Chartered Bank in London. Like Menezes, Talwar was considered to be a rising star at Citicorp, and a potential CEO.
After an unhappy stint at Standard Chartered, Talwar left to form his own equity firm, and now works out of both London and his native New Delhi. He's married to the daughter of one of India's wealthiest real-estate developers, K. P. Singh, head of DLF Universal.
Still another high-profile departure from Citigroup was Shaukat Aziz of Pakistan. As with Menezes and Talwar, the suave Aziz was viewed as a potential CEO; indeed, at a corporate retreat in the mid 1990s, Reed himself named Aziz as among three or four potential candidates to succeed him.
Like another Citibank star from Pakistan, Shuaib Ahmed, Aziz had joined the institution after college in his native Karachi, when he was just 21 years old. He quickly developed a reputation as a globe-trotting deal maker. And when Citicorp found itself in financial distress in the 1990s on accounts billions of dollars of bad loans in Latin America, Reed needed to find funds with which to restructure the bank's operations. He turned to Aziz, who tapped an influential source he'd cultivated during his tenure in Saudi Arabia, Prince Waleed. The prince poured more than $600 million into the bank, almost single-handedly rescuing it.
Waleed increased his portfolio significantly in later years and became the single biggest shareholder, only to be eclipsed last week by the Abu Dhabi Investment Authority, which injected $7.5 billion into Citigroup.
Aziz eventually became head of Citicorp's global private bank. But after his mentor Reed left, it was clear that Aziz would rise no further. He accepted an invitation from General Pervez Musharraf, who had come to power in a military coup in Pakistan in 1999, to return home and become finance minister. Aziz quickly set about reviving Pakistan's economy, restructuring its foreign debt, and wooing investors from abroad.
In 2004, President Musharraf made Aziz Pakistan's prime minister, a job he held until last month, when he resigned. Word has it that the Citigroup board considered him for the CEO's post, or, at least, a senior-level advisory job.
In contrast to Aziz, who has lavish homes in New York and elsewhere, Pandit is not flamboyant. In fact, he lived in a post-war apartment on the Upper East Side for many years before moving to a larger apartment on Park Avenue. But after six months, Vikram and his wife Swati moved out, uncomfortable with what they perceived to be a high-visibility lifestyle they didn't subscribe to.
But last September, the Pandits bought actor Tony Randall's full-floor 10-room apartment at the Beresford on Central Park West.
Senior Writer and Global-Affairs Columnist