Citi downplays nationalization fears
CEO Vikram Pandit says the government could not seize just one bank, noting it would be too 'surgical.'
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| Citigroup CEO Vikram Pandit told investors Tuesday that he did not think the government would be nationalizing banks. |
NEW YORK (CNNMoney.com) -- Citigroup CEO Vikram Pandit downplayed the notion that his bank, or any other major financial institution for that matter, would be taken over the by the U.S. government.
Speaking at a Citigroup-sponsored conference about the financial services industry, Pandit cited regulators' commitment to a free-market financial system.
"You see that in every action they have taken so far," he said.
Pandit also suggested the government would have to act broadly if it attempted to seize control, or "nationalize," parts of the nation's banking system.
"I don't think you can just nationalize one bank," said Pandit. "You cannot be that surgical."
Nonetheless, Citigroup (C, Fortune 500) has been widely viewed as one of the leading candidates for nationalization.
The bank has been one of the biggest recipients of government aid during the current crisis, receiving $45 billion from the Treasury Department, in exchange for preferred stock and warrants.
In addition, the Federal Reserve, Treasury and FDIC agreed last November to backstop more than $300 billion in potential loan losses.
As such, regulators have been keeping a close eye on Citigroup's day-to-day activities as the government seeks to make banks that have received government funding more accountable for their spending.
On Monday, the company declined to take delivery of a new $45 million corporate jet, amid pressure from the Obama administration.
Citigroup has been one of the hardest-hit banks during the recession, and it continues to hemorrhage money. Earlier this month, the New York City-based bank recorded its fifth-straight quarterly loss, losing roughly $8.3 billion.
The company also announced it would sell a 51% stake in its Smith Barney unit to Morgan Stanley (MS, Fortune 500), and unveiled plans to break up into two businesses - Citicorp and Citi Holdings. Pandit gave more details about the looming reorganization Tuesday.
Citigroup announced a series of key management changes as part of its broader restructuring program. Most notably, Citi tapped Mike Corbat as interim CEO of Citi Holdings, which would house Citigroup's pool of troubled assets. Corbat was previously the head of global wealth management at Citi.
The move follows a broader shake-up at the company's board in recent weeks. Richard Parsons, formerly the CEO of Time Warner, was named chairman, replacing Sir Win Bischoff. (Time Warner is the parent company of CNNMoney.com.)
Earlier this month, Robert Rubin stepped down as a director on Citigroup's board. Rubin, who was Treasury Secretary under President Clinton, was widely criticized for not doing enough to keep the bank from increasing its risk exposure, most notably to the U.S. housing market.
Shares of Citigroup were up about 7% Tuesday afternoon, but the stock has fallen nearly 90% from its 52-week high. 
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