[ by Howard Haykin ]

Pandit to Bartiromo: Exit 'Not Abrupt'. 

CNBC correspondent Maria Bartiromo spoke with Vikram Pandit  on Tuesday, following his resignation as CEO of Citigroup.  The following is Ms. Bartiromo's recitation of her Pandit interview.

[Note: CNBC did not edit the transcript;  C-I made some edits to the text.]

I want to go through the points that Vikram laid out to me and then I want to tell you really my analysis of it.

First of all, he's saying this was his decision.  He said it was time after 5 years of accomplishing what he set out to do.  After the earnings, it is clear this company is executing.

Number 2, he said after the earnings were received well and after the conference call with analysts and it was clear that the company has been executing well, Vikram said he calls Mike O'Neill to discuss stepping down.  He said he's been thinking about this for some time and the Board was always ready for this eventuality.  And he came to the decision along with Mike O'Neal that now was the time.

Bartiromo asked why so abrupt  - if now is the time, why not stay on through year end?  Why not stay on the Board?  Why not do this in a more elegant way?

He said this situation and way we have announced it shows that we in fact are organized.  That the board has been ready, we have a new CEO in place and no reason to have the old CEO looking over his shoulder.  Vikram expects the new CEO to continue what he has been doing and that is focus on the emerging markets, focus on the population growth outside of the United States, focus on getting back to the core bank.

O'Neal comes from commercial banking.  Vikram really is a master at risk. So this is a bit of a nuance here that i want to point out:  It feels like this is a return and more aggressive move towards commercial banking and away from the riskier businesses. 

Number 4, I said, "Vikram, isn't it really at the end of the day about compensation?  It wasn't that they just simply did not want to pay you. 

Quote from him, he said:  "Maria, let's not forget. I was the one who worked for a dollar when I needed to.  I stepped up.  no, it was just time.  And again, he repeated after 5 years of accomplishing what we sought out to do, we felt now was the right time to do it. And I'm happy to have the time to think about what I'm going to do next.

My next question was:  Well,what is on the horizon that we need to know about?  Are you involved in the Libor?  Are there any blow-ups down the road?  The value of the derivative differences?  Because remember with Basel III that banks are required to have all the derivatives on one balance sheet.  So I wondered if that is indicating that there is a higher level of derivatives and the valuation is excessive?

I would not be leaving if I did not feel that this company is in very good shape.

So he suggested there are no blow ups on the horizon.  Good shape.  My analysis - i frankly think this was about compensation.  Let's face it.  You have an individual here having sold his hedge fund to Citi for $800 million, taking the CEO role 5 years ago, and then during the financial crisis agreeing to work for a dollar. Getting bashed by the President and populous and he probably just said I'm done.  They don't want to pay me like my colleagues. Again, that is my analysis.

I told you what VIkram Pandit said in terms of what's behind the departure.  So he's sticking to his story that this is his decision, he's been thinking about this for a while and asked if the report was received by investors.  He decided now is the time to step away.  This is what he has just told me and he said that there are no bombs on the horizon having to do with Libor or the derivative portfolio.  This is what he just told me.  Of course investors still want to know when they'll see a real dividend, real growth from the company. 

I spoke with the single largest shareholder.  He said I just spoke to Vikram and he told me he's leaving at the peak of strong performance.  Company has improved quite a bit and has stabilized quite a bit from the time of the recession. 

But it's a situation that is very abrupt - leaving some people saying why does this happen?  Why is he stepping down now?  He says it was his idea, that this was organized.  He said this proves that it's organized. but one has to wonder if this is about compensation given the fact that we continue to see the commercial bankers really running the show here as opposed to the institutional bankers and of course the public's upset over compensation and the public's upset over the stock dropping by 89%. 

I don't think anybody would believe this was organized  - and about your point about him getting bashed, all morning long we're hearing about how he failed with the dividends, the pricing with the Smith Barney deal.  The piling on continues.  And the stock is higher in the wake of him leaving.   And I think that's the point.  That's why you have to believe that there's more to this.  I think Vikram Pandit has a lot of credibility.  I think shareholders were willing to hold his hand,  hold their hand, as they believed that he was fixing things.  But something's got to give after 5 years with the stock being down 89%, with some people questioning if in fact the bad banks -- bad part of the banks meaning the bad valuations of real estate, et cetera.  That they continue to see top valuations and it wasn't shrinking fast enough.  The plan to grow the core commercial bank, but some people feel it wasn't fast enough. 

I believe that after the earnings were released, after the call and with Mike O'Neal, when it was clear that he was not going to get higher compensation, that perhaps was equal to some of his colleagues in banking, that he just said I'm done. He said, look, I can't continue working for a dollar,  I can't continue doing this and get bashed in the public's eye while not getting the compensation I deserve.  Again, that's my analysis.  He stands by the story that it was his decision that it was time because it is clear he has finished what he has set out to accomplish, and that he and Mike O'Neal decided this together.

Now, others in the market tell me that they were like oil and water - given the fact that O'Neal is a commercial banker, Vikram is coming at this from a different standpoint in terms of institutional banking.   So we'll see. I  believe more will be revealed, but it seems at first glance that this is an issue over compensation.  And that tension between commercial bankers and investment bank IS A very old story on Wall Street. 

To access the interview, go to:  CNBC Video, 10/16/12].