Citigroup names Pandit CEO

Vikram S. Pandit speaks at the Reuters Finance Summit in New York on November 10, 2004. Citigroup on Tuesday named Pandit, head of its institutional clients group, as chief executive and said Win Bischoff would serve as nonexecutive chairman, effective immediately.

NEW YORK (Reuters) - Citigroup Inc (C.N) on Tuesday named Vikram Pandit, head of its institutional clients group, as chief executive and said Win Bischoff would serve as nonexecutive chairman, effective immediately.

The announcement ends weeks of speculation over who would take the helm at the largest U.S. financial services company. Citi has been seeking a replacement for former CEO Charles Prince, who departed on November 5 under pressure from shareholders frustrated by Citi's laggard performance.

Robert Rubin, who has served as chairman during this interim period, will return to his previous duties as chairman of the executive committee. Bischoff, a director, has served as acting CEO.

Pandit formerly was Morgan Stanley's (MS.N) head of investment banking and capital markets, one of the biggest jobs on Wall Street. Yet the India-born executive has never run a public company, let alone one as big and complex as Citi, causing concern for some investors.

"It's disappointing. Pandit is probably a decent manager, but he is a segment manager. He is not a CEO," said William Smith, CEO of SAM Advisors, a Citi stock holder. "Win Bischoff is an absolute disgrace. He has absolutely no reason to be even near the chairmanship."

Citi's board, which came under fire as Prince-led Citigroup reported billions of dollars in credit losses, may face more criticism for what some investors have called a disappointing search.

By comparison, Merrill Lynch MER.N won praise as it attracted NYSE Euronext chief John Thain to replace its chief executive, Stan O'Neal.

"Think of the people they could have gotten for this role who didn't make themselves available or didn't want it. People with experience running a major money center bank. People with experience running a massive corporation. And they couldn't get someone like that," said Henry Asher, president of Northstar Group, a New York-based money manager.

The news was announced on Tuesday moments before the U.S. Federal Reserve cut benchmark interest rates by 0.25 percent.

Shares of Citi were down 3.6 percent at $33.51 in afternoon trading on the New York Stock Exchange.

(Additional reporting by Jessica Hall and Mark McSherry; Editing by Jeffrey Benkoe, Toni Reinhold)