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Quick Hits: Citi's Pandit Stays in the Picture

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Brief scrutiny of today's headlines.

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Citigroup (C) is about to reverse its business plan, but so far the board of directors backs CEO Vikram Pandit.

The company, formed in 1998 by the merger of Travelers Group and Citicorp, expected to thrive as a "financial supermarket" offering 1-stop shopping for insurance, banking and wealth management.

The idea never worked as well as expected, in part because different parts of the company sometimes went after the same clients. The company has 300,000 employees in about 100 countries, and it simply may be too large and diffuse for effective management.

Citigroup appears ready to sell its Smith-Barney brokerage house to Morgan Stanley (MS) in a deal expected to be announced this week. Cash raised in the deal probably would be used to strengthen Citigroup's balance sheet.

The company needs cash, even after receiving $45 billion in taxpayer money in November and a hefty investment from a Saudi billionaire.

Citigroup is likely to report a large operating loss when it announced fourth-quarter results January 22nd. It would mark Citigroup's fifth consecutive quarter of losses, and could boost the company's total losses for 2008 to about $20 billion.

The Wall Street Journal reports that the board backs Pandit, Citigroup's CEO. Richard Parsons, a former CEO at Time Warner, said "there's no truth" to the chatter that Pandit may be replaced just a year after he took over the top spot.

By Wall Street standards, that's a Zen-like state. The pending sale of Smith Barney is part of efforts to turn the company around - but continued steep loses may define the limits of the board's patience with Pandit.
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No positions in stocks mentioned.
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