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Tuesday, 13 January 2009

Abigail Hofman: Heroes and villains of 2008

Those of us involved in finance tend to treat the vagaries of investment banking as a matter of life and death.

In my November 2008 column, I mentioned that at the IMF meetings I had overheard Vikram Pandit sounding very upbeat. "I wonder if Pandit is an extremely optimistic person or in a cocoon of senior management denial?" I wrote.
Subsequently, an interesting Citi document crossed my desk entitled "Town Hall –Podium copy speaking notes". These were the notes for a speech that Vikram Pandit gave to employees on Monday, November 17 2008. "Exactly one week ago, our company’s leadership group got together to take stock of your accomplishments in 2008," the document starts. "We walked away with a clear sense that we are entering 2009 in
a strong position, much stronger than we entered 2008... Everyone walked away enthusiastic."
Later in the speech Pandit claims: "We have spent the last year ‘getting fit’... and are in a strong competitive position... We will be the long-term winner in this industry." There then follows a homily on banking that would make even a five-year old child cringe: "As I said, we are a bank. What does a bank do? A bank takes deposits and puts them to work..." And Citi’s chief concluded with a flourish: "Let’s show the world what we can do!" One week later, Citi was
effectively bailed out by the US Treasury after a 70% drop in its share price during the month of November.
Perhaps "cocoon of senior management denial" was an understatement.