Today is Vikram Pandit’s birthday. Whether the Citigroup (C) chief executive is consciously aware of it, the cycle of Mercury retrograde (January 11 – February 1, 2009) is an appropriate time for the banking behemoth to reverse its stance by divesting many of the components of the financial supermarket model established by former CEO Sandy Weill. The three week periods three to four times a year when the planetary energy of communication is retrograde offer an opportunity to rethink past actions and viewpoints and initiate a revised course of action once Mercury moves forward.* Pandit has the potential to do his best thinking regarding how to handle legacy business issues when Mercury is retrograde since Pandit was born with Mercury retrograde in Capricorn.
In “Rubin Pries Open The TARP For Citigroup,” I wrote: “Transiting Pluto in Capricorn will conjoin his natal Venus in Capricorn and challenge natal Jupiter in Libra throughout most of 2009. Pandit should be obsessively focused on selling assets, eliminating excess waste, taking more writedowns, and modifying mortgages where feasible beyond the FDIC’s procedures required in the government’s arrangement.” And now with Pluto making its first exact challenge to Pandit’s Jupiter in Libra, Pandit has reversed his stance and agreed to merge (Pluto) its standalone Smith Barney offices into a joint venture (Jupiter in Libra) with Morgan Stanley’s (MS) retail wealth management business. Morgan Stanley will pay Citi an additional $2.7 billion cash to obtain a 51% stake in the joint venture which will be known as Morgan Stanley Smith Barney.
Capricorn is a cautious and conservative energy, and the cycle of Pluto in Capricorn (2008-2024) represents a cycle of economic contraction. Pluto represents debt, lending, taxes, and toxic conditions, and Capricorn represents the government. Citigroup received $45 billion from the TARP, and the government could potentially have to backstop up to $249 billion in losses from Citi’s real estate portfolio. The government has been increasing the pressure on Citi to downsize. Pluto challenging Pandit’s Jupiter represents Citigroup’s plan as reported in today’s Financial Times, to place toxic assets that make up one third of its balance sheet into a separate non-core or “bad bank” unit that would be reported separately from its global commercial banking operations. Over time the components in the non-core unit would be sold or the whole unit spun off as economic conditions improve.
Pandit should have learned that Mercury retrograde periods are not the time to start something new. During the previous Mercury retrograde cycle, Pandit tried to acquire Wachovia with the help of the FDIC, but was usurped by Wells Fargo’s (WFC) more generous terms. Mercury turned retrograde January 11 opposite Pandit’s natal Uranus in Leo, serving as an urgent wake up call to remind him that his purpose as CEO of Citi is to break up (Uranus) Citi’s failing financial conglomerate. Today’s appropriately titled Wall Street Journal editorial, “Breaking Up the Citi” describes these energies in greater detail. Reflecting Pluto’s transit to Pandit’s Jupiter, and the opposition of Saturn in Virgo and Uranus in Pisces impacting Citi’s stock chart Jupiter in Pisces, the Journal writes: “A bank that consistently has to be rescued by taxpayers(Pluto in Capricorn) lest it take down the entire financial system is too big to succeed (Jupiter). The only way to protect taxpayers is to reduce the size and scope (Saturn) of the bank so that it no longer poses a systemic risk. The planned asset sales reported yesterday are a step in the right direction. Citibank was born as a financial roll-up of sorts, and there's nothing wrong in principle with growth by acquisition. But Citi's repeated brushes with death (Pluto)** prove that its management has never figured out how to run the business.”
With his Sun, Mercury, and Venus in Capricorn, and his Sun and Mercury challenging Mars in Aries, Pandit has the planetary potential for this enormously tough task. Capricorn rules time. Pandit wasted time by not selling assets as soon as he became CEO in December 2007 when market conditions were much better. For Pandit, every second counts as the chorus of doubters in his ability to lead Citi is growing. Solar eclipses can bring changes in leadership, and the January 26 Aquarius Solar Eclipse opposes Pandit’s natal Uranus in Leo. Citi has rescheduled its fourth quarter earnings call for Friday, January 16. Mars in Capricorn will conjoin Pandit’s Mercury then. Pandit should be prepared for some very aggressive questioning by analysts during the Q&A session. Without presenting a sustainable path forward, Pandit will have no more opportunities to instill confidence in Citigroup.
*Planets do not really move backwards, but appear to from Earth’s vantage point.
**( ) are my inserts.
Vikram S. Pandit: January 14, 1957 time unknown Nagpur, India
Citigroup: October 8, 1998