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    BEIJING, Dec. 13 -- Citigroup Inc named investment banking head Vikram Pandit as chief executive and acting CEO Win Bischoff as chairman on Tuesday, disappointing investors who wanted a big-name outsider to overhaul the bank.

    Citi had been seeking a replacement for former CEO Charles Prince, who left on November 4 under pressure from shareholders frustrated by the performance of the largest US financial services company. Citi shares have fallen by about a third this year, and the company has taken massive write-downs for mortgage-related holdings.

    The appointment of Bischoff, 66, was a surprise. Formerly chairman of Citi's international businesses, Bischoff served as acting CEO for the past five weeks. Former US Treasury Secretary Robert Rubin, who has served as chairman in the interim, will return to his duties as chairman of the executive committee.

    Pandit's career has included heading investment banking and capital markets at Morgan Stanley. He joined Citigroup five months ago when the bank bought his year-old hedge fund firm, Old Lane Partners, for $800 million.

    But some investors expressed concern that the 50-year-old, India-born executive has never run a public company, let alone one as big and complex as Citi. Pandit also has no experience leading a consumer business, which at Citi generates more than half of overall revenue.

    "There was some hope that somebody with a bigger name would be chosen, so maybe from that perspective there is some disappointment," said Lee Delaporte, research director at Dreman Value Management, which has $22 billion of assets and has sold its Citi holdings.

    Shares of Citi fell 4.2 percent to $33.30 by the close of trading on the New York Stock Exchange. Financial stocks fell on disappointment that the Fed, which reduced its benchmark rate by 0.25 percent, did not cut rates further.

    Underwhelmed

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

    Merrill Lynch won praise for recruiting NYSE Euronext chief and former Goldman Sachs President John Thain to replace chief executive Stan O'Neal. Thain was also a candidate for the Citi job.

    "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.

    Wall Street has spent weeks trying to predict who would take on one of the highest profile jobs in global finance.

    Putative candidates had included American International Group Chairman and former Citi Chief Operating Officer Robert Willumstad, Barclays President Bob Diamond, and Wells Fargo Chairman Richard Kovacevich.

    Pandit needs to restore investor confidence in Citigroup. In recent months, there has been growing concern among investors that Citi is too big and should be broken up.

    Citi said in November that it faced up to $11 billion in fourth-quarter losses tied to mortgage investments. The company reported $6.4 billion in third-quarter write-downs and could face more losses from home loans and credit cards.

    In November, the company sold a $7.5 billion stake to Abu Dhabi to shore up its capital base.

    Pandit said his top priorities include improving productivity, allocating capital and resources better and simplifying the bank's structure.

    Pandit said he would undertake a full review of Citi's businesses, though he declined to set a time frame for when he would announce results.

    Born in Nagpur, India, and with three degrees from Columbia University, Pandit joined Morgan Stanley in 1983. He rose through the ranks to become president of institutional securities.

    At the same time, he was criticized by some insiders for being too conservative about taking trading and lending risks.

    Pandit quit Morgan Stanley in April 2005 after former CEO Phil Purcell named Steve Crawford and Zoe Cruz as co-presidents over Pandit. He set up Old Lane, a hedge fund and private equity investment firm, with other Morgan alumni.

    Citi bought Old Lane and made Pandit head of a small unit for alternative investments, but from the start he was considered a likely successor to Prince.

    (Source: China Daily)

New chief executive of Citigroup, Vikram Pandit.(File Photo)