Major Citigroup (NYSE:C) Shareholder Saudi Prince Alwaleed bin Talal Pressures CEO Vikram Pandit to Perform in 2010

Saying that it was understandable for the last couple of years with the global recession cutting into revenue and profits, Saudi Prince Alwaleed bin Talal told Citigroup (NYSE:C) CEO Vikram Pandit that this year is crucial, and he expects a strong return on his investment in the company.

In an interview, Alwaleed bin Talal said, “I don’t threaten those CEOs that I meet but I told him (Vikram Pandit) that the market gave you two years’ leeway, but I think now it’s time to deliver and 2010 for him is really the year to make it or break it and he has to deliver.

“It’s very important … For the shareholders that have been very patient with Citibank that the honeymoon is over now; two years is enough and I think he will deliver in 2010,” said Alwaleed.
 
It’s interesting to listen to the Saudi Prince talk, although his sense of optimism for Citigroup in general, and the economy specifically, is unfounded.

There is very little optimism that the banking industry will do well this year, with defaults for retail loans expected to continue with mandated ARM loan re-sets in the first half, and growing defaults for commercial loans in the second half of 2010 projected.

Add to that the estimates that investment banking will do poorly, with commodities the only asset class poised for growth in 2010, and you have to wonder where the revenue and profits will come from.

It would primarily have to come from emerging markets, and it’s highly unlikely they’re rebound enough to make enough difference for Citigroup in 2010.

There are too many variable to determine the overall performance in 2010 for Citigroup, but in the U.S. it’s not going to happen or be the catalyst for growth it has been in the past. Most large banks understand that while they can cut costs and be profitable in the U.S., growth isn’t going to be generated there in the future for the companies.

This is why I say the variables related to emerging markets and the unpredictability in relationship to them, make it a toss of the dice as to whether they’ll generate growth at all in 2010, let alone make up for the weak U.S. market.

If major shareholders like Alwaleed expect a big turnaround this year at Citigroup, they’re probably going to be very disappointed, and that means there could be an uprising in the latter part of 2010 or the early part of 2011 concerning whether Pandit is the right man for the job.