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At Ease

A penny a share. So minuscule is the dividend just reinstated by Citigroup, even Vikram Pandit overlooks it when he affirms that the company will "begin returning capital to shareholders next year."

But the May declaration of a 1-cent quarterly payout was more significant than the token size of the dividend would suggest. Beyond carrying the implicit endorsement of the Federal Reserve, which had barred rival Bank of America from paying any dividend at all this year, it suggested that Citi was back in position to do things because it wants to, and not necessarily because its hand is being forced.

For Pandit, who was made chief executive during a crisis that was just beginning to unfold, the downshift in the influence of external events means he has the chance, at long last, to set new priorities and put his own imprint on the company.

In an exclusive interview, Pandit described how Citi made the transition "from a wartime to a peacetime environment" after the most acute phase of the financial crisis had passed. He talked about the reinvention of Citi's image, his own evolution in one of the highest-profile jobs in all of financial services, and his vision for what comes next at a company known for its pattern of ambitious growth followed by chastized retraction.

With the matter of Citi's immediate survival having been addressed, running the company day to day is "intense, but it's not crisis-intense," Pandit says. "I'm now doing the kinds of things I hoped to do when I came in" as CEO three and a half years ago.

This includes stripping Citi down to its core businesses in retail and wholesale banking, sharpening its competitive edge in emerging-market economies, and making key outside hires for a U.S. consumer business long seen as rudderless. He also intends to identify leaders within the company, with the aim of breaking the cycle of poor succession planning that has plagued the firm for years.

There was little time for such strategizing when Pandit was named CEO in December 2007. The company was floundering on its way to amassing $18 billion in subprime mortgage-related write offs that quarter, which was just a prelude to the liquidity crisis to come the following year. Pandit moved quickly to raise capital, dump assets, slash jobs and sharpen risk management.

"There are lots of friction costs to change, and what a crisis does is allow you to understand that those costs are with you anyway, so let's go," he says.

From the outside, it looked more like necessity than strategy. What choice did Citi have, for example, but to start selling assets more aggressively when a shotgun wedding with Wachovia got annulled, leaving Citi with far too few deposits to support its hulking balance sheet?

But insiders say that some bold decisions-including a choice to place 40 percent of Citi's assets into Citi Holdings, a bucket for businesses and investments slated to be sold or wound down-helped to crystallize a vision for the company even while the specifics of the strategy were still being hashed out.

"In some ways, all the banks out there have a 'Holdings.' We just chose to declare ours upfront," says Michael Corbat, CEO of the Citi Holdings division. "What that's done culturally is it's created a lot of clarity within the organization." So much so, Corbat adds, that in a company of 260,000 people, "you can ask in about any country, at any level of the company, 'What's our direction? What's our mission? What, as a company, are we focused on? And you will get a very clear, articulated response from our employees in terms of what that is: we're going back to our roots of being a bank, and as Vikram describes us, we are America's global bank."

A noble goal, certainly. But is it enough to sustain the interest of 260,000 people coming down from the collective adrenaline rush of working in corporate survival mode?

Pandit acknowledges the distinction in motivations. "Our challenge is a different challenge right now," he says, relaxing in Citi's executive suite.

As he talks about Citi's future, Pandit is engaged but not effusive. He speaks in a measured way with a cool demeanor-not "I'm king of the world" cool, but "I've been charged with a task and I'm handling it" cool.

"I tell our people that I do fundamentally believe that we've got the best set of cards of any large financial institution-and by the way, that's because we traded and we threw and we narrowed it down and said we want to keep [some]. Our challenge is to get this organization to play them to the max."

Of course, there will be no concrete way to measure whether Citi has succeeded in that. "A lot of this is internal to us," Pandit admits. "[But] there is no lack of urgency in the organization, for the fact that we've got a great opportunity to make something happen."