Citigroup's Crisis Chief Finds Home in Finance's New Frontier

By Telis Demos 

A decade after the financial crisis , The Wall Street Journal has checked in on dozens of the bankers, government officials, chief executives, hedge-fund managers and others who left a mark on that period to find out what they are doing now. Today, we spotlight former Citigroup CEO Vikram Pandit and the former chairman of the Commodity Futures Trading Commission, Gary Gensler.

Vikram Pandit spent the financial crisis taking the heat for the sins of Wall Street's past. Now, he's focusing on its future.

Mr. Pandit became Citigroup Inc.'s chief executive on the eve of the financial crisis in December 2007 and abruptly resigned nearly five years later when it became clear the board was about to replace him with current CEO Michael Corbat. In the years since, he has invested in a number of emerging financial firms and fintech startups in part through his Orogen Group, a Berkshire Hathaway-style holding company for financial-services investments.

"It wouldn't have been my choice to leave that abruptly, but it was the right time for me to leave," he said in a recent interview.

Mr. Pandit oversaw a series of bruising maneuvers to keep the unwieldy megabank afloat, including a massive government bailout, the contentious sale of its asset management business, the cleaving off of a "bad bank" holding company and the remaking of the bank's board at the behest of the U.S. Treasury.

Most observers agreed that shrinking Citigroup and refocusing it on corporate and retail banking -- Mr. Pandit's core strategy -- were the right moves. But with the stock price at a fraction of its peak and taxpayers on the hook for billions of dollars, his execution was under constant scrutiny.

"I remain proud of everything I accomplished," he said. "The bank has been methodically executing on the strategy put in place, and it's working."

Following his exit in 2012, Mr. Pandit was free to embrace his reputation as a banking wonk, which was sometimes used against him in the thick of the crisis.

An engineer by training, Mr. Pandit began his finance career as an electronic stock-trading pioneer at Morgan Stanley, which still boasts the top franchise in that business. Under his watch, Citigroup started a Palo Alto, Calif., venture-capital unit to invest in, and learn from, startups.

Shortly after leaving Citigroup, Mr. Pandit, 61, began investing in emerging financial firms, including a nonbank lender in India. He also has backed several fintech startups, including Coinbase Inc., NerdWallet Inc., CommonBond Inc. and TransferWise Ltd. He was the only banker interviewed in a "60 Minutes" feature on fintech in 2016.

For a few years, Mr. Pandit was involved in a consulting venture with academic economists including Steven Levitt of "Freakonomics" fame. In 2016, Mr. Pandit entered into a partnership with Atairos Group, the $5 billion investment vehicle backed by Comcast Corp., to create Orogen.

Orogen has provided some $100 million in capital to a new credit-card lender, Fair Square Financial LLC, which offers the Ollo card. It also invested $108 million in an information-technology-services firm, Virtusa Corp., that helps banks and others develop digital applications. Virtusa's market value has increased by 70% since Orogen invested last year.

Mr. Pandit said banks and other established financial firms need to quickly embrace new technologies if they want to avoid the fate suffered by, for example, traditional retailers as e-commerce emerged.

"I lived through the dot-com era and watched what happened in other industries," Mr. Pandit said. "Changes are needed because regulation has created more of a level playing field in banking and finance, and there is competition from other business models."

Write to Telis Demos at [e-mail]

(END) Dow Jones Newswires

July 21, 2018 09:14 ET (13:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.