“Our distinctiveness is we connect the world better than anyone else. We have a great capability of building a business around that. And we are in the process of building a culture around that.”
That’s Vikram Pandit on his company, Citigroup, as reported in The New York Times. What does it mean? Your guess is as good as mine.
What does it mean to “connect the world?” Sure, Citi is in a lot of places. But it is largely a retail bank — you know, the kind that you go to on the corner to take money out of your ATM. Most of its customers don’t move around the world very much. How do you “build a business” around connecting the world? This isn’t Cisco we’re talking about. And how do you “build a culture” around connecting to the world? To build a culture, you need to put together a group of people who understand the world, approach problems, and treat each other in a similar way. A new slogan won’t do it.
CEOs do have to speak in vague platitudes occasionally, but note that this was in an interview with reporters who were writing a feature article about the challenges facing Citigroup.
What Citigroup needs is a strategy. I can’t believe I’m saying this; after working at McKinsey, I thought that “strategy” was by far the most overused word in business. But what I mean is it needs some kind of story about what its customers need and what it can do well (better than its competitors), and that story has to somehow relate to what it is today. Think Lou Gerstner in the 1990s focusing IBM on services, or Larry Ellison deciding he would just buy all of his competitors and be done with it. If you’re making money, people will overlook the fact that your company doesn’t make any sense; if you’re struggling, like Citi is, they won’t.
Without such a story, it’s just a tangled mess of bad acquisitions that have no reason to be together. Now, the usual course of action in situations like this is to try to come up with a story that somehow justifies all the various bits and pieces, which gives you a story that is so weak as to be meaningless. The better answer is to come up with a story first, and then reshape the company to support that story. But that’s hard work.
Instead, a year after the crisis that would have put it out of business without extraordinary government assistance, instead of a strategy, all Citi has is a pro forma financial statement: the arbitrary division between “Citicorp” and “Citi Holdings.” As other people observed at the time of the split, there was no sound logic for how the company was split up. For example, North American retail banking and credit cards are on one side, but mortgages, auto loans, and student loans are on the other. So their plan is to run a retail bank that doesn’t lend money to households? Oh right — they’ll take the deposits and invest them in CDOs.
By James Kwak
The Baseline Scenario 
“it is largely a retail bank”
Do you have any information about their revenues? Is there a way to account for them, comprehensively, to see exactly how their activities break down, and who — inside or out — is profiting from them?
Imagine a guy who comes home late, and gives his wife an explanation of what he was up to along these lines.
In my limited experience, when a guy starts to talk like that, he either has absolutely no idea of what his real job is and how to do it, or he no longer cares enough about the person to whom he’s talking to bother to tell them the truth.
In either case, it’s time to part company with the guy, because if he willing to con an audience of strangers, he’s willing to con you, too.
Back in the days when John Reed was running Citi the global retail banking made some sense as they leveraged their consumer credit knowledge pretty much worldwide, pioneering many markets. The gathering of global high net worth accounts for judicious management also seemed to work well. The number of former Citi executives from third world countries that ended up as the finance ministers of their countries makes an impressive list. Then along came Sandy going full speed ahead. That might have been OK, but the exit Jaimie the navigator and enter Bob the window dresser. Damn, but didn’t Rubin look nice, all stuffed for display, as a testimony to the old saying “It’s not what you know, but who you know.” Yeah, right.
The statement is just weird. Why is he talking about the capability Citi has of building a business. This isn’t a start up. This is a company that has received billions in taxpayer money and we’re supposed to feel better because it has the capability of building a business?
So Citi was bored with boring banking and wanted to get into exciting banking, but was incompetent at it.
They were able to do this in the go-go 90s just like a dotcom start-up, and were just as hollow and conceptually stupid as most dotcoms.
But since their business was finance and not a hyped website, they were able to keep the scam going for longer than no-there-there.com. Another bubble was there for them.
And today they’re the #1 beneficiary of Bailout America, a government whose ideology and policy is completely predicated upon and centered around the imperative of maintaining a handful of finance rackets in existence and treading America as a plunder till.
So rejoice, America! When you behold this jackass Pandit, know that a tangible fraction of your paycheck is conveyed from you to him. That’s the leech you work for. That’s who your military fights and dies for.
We have become as a Citi on a Hill.
Statement makes perfect sense if your strategy is to ensure a bailout for the next time you fail. If you’re connected to everything then everything must rely on you right?
I wonder how much they paid the agency that came up with that brand story? I tell our startup businesses (we’re an incubator) that if you don’t have a good story as to what you are doing and why, you will fail. So I guess that’s what Citibank did. And Obama is doing now. He doesn’t have a good story either. IKt’s all about story. People want to understand what’s happening around them, and stories make that possible.
To spotlight Vikram Pandit is a bit unfair. You could have probably picked any one of the tbtf CEOs and found many equally innocuous statements. One of these institutions has a 30 page vision statement that is total word spaghetti.
The problem is that ‘nickel and diming as many retail customers as possible while buying up the competing banks, so that people have less local branches to chose from (and try to get Federal dollars too)’ is a strategy which doesn’t exactly roll off the tongue.
That Vikram Pandit quote doesn’t make me worry. It makes me laugh. If you have to throw out vague statements like that, it shows Pandit’s been told by legal “Try to convince them we’re in telecommunications!!! Ixnay on the ‘banking’ word!!!”
It seems that the statements made within earshot, publicly, by all of the big bankers, are nothing but meaningless hogwash, but the truth would be unpopular. They should just stay quiet, and, if asked, feign innocence and say “no comment.”
What’s the deal? Do they tell the truth, or remain silent. Silent, obviously!!
Fair or not, Citibank is the posterchild for this mess. To say the others are all doing it too is correct, but C provides the archetype. I see no need to be “fair” to any of these clowns.
Being silent would (as James points out) suggest that they were silently going about the real work of fixing the mess they have made. They will never do that. So blah, blah, blah it is, as they go about the business of collecting their oversize paychecks from we, the people (lower case letters, in their minds).
If you strung together all the CEO statements of the last twenty years we wouldn’t need a comedy channel or William Gaddis either. This morning on CNBC Warren Buffet told the world he is buying Burlington Northern because the railroad provides an energy efficient solution to the movement of goods. He’s doing it for the environment! I’m not kidding. Every one of these guys is braindead from having his a$$ kissed for twenty years. But as Buffet says himself, you don’t know who is swimming naked until the tide goes out.
People think Citi is a business. It is merely the carcess of a promotion, the crowing achievement of a guy who started running pump and dump operations in the sixties. Notice that when the music stopped Sandy’s ox wasn’t gored.
I’m surprised Citi said anything given that most zombies can’t speak. Pandit’s jibberish is simply an unintended admission that death is near. No more life-support — pull the plug.
Columbia University Professor Joseph Stiglitz says we should regret not nationalizing the banks. I assume he is mainly talking about the government’s resolution authority. Also maybe being more hard-nosed with the big bank CEOs about lending out to consumers after they had been bailed out by the U.S. taxpayer.
Firms like Goldman Sachs are still paying gigantic salaries to executives. Here is the link to Stiglitz comments and story by Judy Chen. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGR4KXaGwxd8
“Our distinctiveness is we connect the world better than anyone else. We have a great capability of building a business around that. And we are in the process of building a culture around that.”
“That’s Vikram Pandit on his company, Citigroup, as reported in The New York Times. What does it mean? Your guess is as good as mine.”
He is confusing Citigroup with the Internet. He is reinflating the previous bubble. ;)
It’s perfectly fair while they owe us their existence. If they could stand on their own, we wouldn’t need to be so interested in their “innocuous” statements.
I assume he is mainly talking about the government’s resolution authority. Also maybe being more hard-nosed with the big bank CEOs about lending out to consumers after they had been bailed out by the U.S. taxpayer thanks.
Also maybe being more hard-nosed with the big bank CEOs about lending out to consumers after they had been…
Check out an article I wrote on the same theme, in early October.
http://www.thestreet.com/story/10606195/1/citi-communication-breakdown.html
One of the corporate ‘Nomenklatura’ – he’s grossly overpaid, and holds his job not by having accomplished anything REAL but only because he’s one of the annointed corporate ‘masters’. Bob doesn’t like people disagreeing with him and doesn’t like anyone smarter than him. This is not good because he’s not that smart. He’s good at scheming and politics but REAL accomplishments that better a business….. not much of a track record.
He was godawful as EVP of operations at Paine Webber. he never dfid come up with the new broker system he was tasked with. As soon as it was revealed to be all smoke and mirrors, he bailed for Met LIfe. All he did there was screw the policyholders and make the execs rich.
He was never going to be able to transform AIG – he was hired only to provide the ILLUSION of ‘improvement’. The job is proving to be harder than he thought so he’s running back to hsi estate in Croatia.