The ouster of Vikram Pandit, and what that means for big banks Research Paper

The ouster of Vikram Pandit, and what that means for big banks - Research Paper Example This paper will address Pandit’s ouster, and describe how this major event in Citigroup will influence the future operations of Citibank, as well as other banks in the same industry. Mr. Pandit took over as the bank’s CEO in 2007 when the bank was in a financial turmoil, but slightly recovered the profitability of the bank in 2010. Under Pandit’s management, much of Citi’s resources were devoted for future profitability. Expanding market to the developing countries was a prospective Pandit held (David, Suzanne, and Dan 1-2). The reasons offered for Pandit’s ouster emanate from struggles to recover from past financial crises at the bank. Mr. Pandit was forced to resign after the board of Directors at Citi bank felt that he managed the bank poorly. The board also claimed lack of appropriate communication from the CEO on vital business matters. During the tenure of Pandit, the shares of Citigroup fell by 89%, which resulted in a revolt by shareholders over his executive pay. The Federal Reserve also rejected Citigroup’s plan to purchase back stock. In addition, there was a $2.9 million write-down by Morgan Stanley, of a brokerage joint venture. All these unfortunate happenings can be numerically represented, but most probably point to poor judgment, rather than day-to-day oversight of specific business units (David 2). Michael Corbat, Pandit’s replacement, may not perform as Pandit, who was credited a well performer, who knew the positions of the bank inside out. Corbat’s strategic directions for future of the company are also still uncertain. Many challenges Corbat, as he will feel the pressure of impressing quickly, since the bank’s shareholders are now frustrated about the bank’s uncertainty. Citigroup investment bank is a potential victim of shrinkage. It is enormous, but with uneven revenue since the times of the financial crisis. This continued decline has to be addressed in order to gain stability again. Mr. Corbat will also have to deal with the â€Å"black box† reputation of the bank. Observations show that the bank’s disclosures are not as comprehensive as those of other banks are. In order to regain the confidence of investors, Corbat has to tackle this issue also. Consumers should expect to feel the difference between Citi managed by Pandit, and Citi managed by Michael Corbat, Pandit’s successor. This kind of transition at Citi may not positively influence on the financial health of the US banking industry, and the general US economy. This is because Citi is a bank that has been considered ‘important’ by the regulators, amid financial crisis. It is a troubled bank, and still struggles to gain stability. Pandit was a CEO that had set out to turn around the case of Citi bank, and ensure its total economic recovery. However, by firing such a dedicated CEO, Citi bank risks continued vulnerability to financial crises. The shareholde rs of Citi bank continue to be adversely affected by the bank’s prolonged stagnation in financial instability. However, more parties will feel the pinch of this as it will affect the whole banking industry as well as the national economy. Citi is in the process of repairing its balance sheet, it is then expected that it will cut down on customer lending, in a bid to save more. Its customers will not access

Avoiding Taxes Essay Example | Topics and Well Written Essays - 750 words

Avoiding Taxes - Essay Example The US tax returns process requires the US citizens to pay tax on the incomes they earn all over the world. The US citizens are required to pay income taxes on their world-wide income irrespective of the fact whether they visited the US land in recent times or in the recent decades. This led to the renouncing of US citizenship by the US people which has increased from 231 in 2008 to 1781 in 2011. By giving up US citizenship, the people of US or people residing abroad are able to reduce their tax liability as they are not required to follow the lengthy process of US tax returns (Yoshov, 2007). The tax liability is also reduced as the taxes on worldwide income are reduced as an effect of renouncing the US citizenship. Thus the overall tax liability is reduced as a result of renouncing of US citizenship by people especially in US and also by people holding US citizenship and residing abroad. Tax liability: Effects of dual citizenship Many people having US citizenship have migrated to other countries where they also hold a citizenship of that country. England and Wales constitutes the highest number of US citizens all over the world. These people have dual citizenship in both the US as well as in another country like England. The effect of dual citizenship is, however, complicated as the people are required to pay taxes to both the US government as well to the Inland Revenue System of the country of residence. Thus the effect of dual citizenship does not help the people in reducing their tax liability. Because of the US citizenship, the people are required to pay taxes for the worldwide income. Apart from this, the US citizens are also required to pay taxes to the host country where they have migrated and are earning their income (Patterson, 2006). Apart from this, the dual citizenship would also enforce the US citizens to pay capital gains tax to the US government if they sell their properties in another country which is their main residence. Thus dual citizenship would make the tax liability more complicated. Comparison: Effects of renouncing US citizenship to establishing dual citizenship The effect on tax liability of the income earned by the people having US citizenship could be compared to the people having dual citizenship. The act of renouncing the US citizenship is a much more acceptable option as the people would not be required to pay taxes for more than once for only one income. By giving up the US citizenship, the people would not be required to pay taxes on their worldwide income. They would only be required to pay taxes to the host government for the income that they have earned on their land. The renouncing of US citizenship, however, involves a one time cost as the US citizens should complete a US tax return for five years. There are also legal costs involved for the process of immigration. On the other hand, dual citizenship would make the tax liability much more complicate d (CCH Incorporated, 2007). The citizen would have to pay income taxes to the US government irrespective of where they have earned their income. The sale of properties in the country of residence would require the citizens to pay capital gains tax to the US government. Apart from this, the citizen would also require to pay taxes to the host government for the income earned in the host country which is their actual residence. Thus from the perspective of reduction of tax liability, dual citizenship would be more complicated as compared to renouncing of US citizenship. Decision on renouncing citizenship versus dual citizenship From an individual perspective, renouncing US citizenship would be much easier as compared to taking up dual citizenship. From the view point of reduction of t