Vikram Pandit had been at Citigroup only eight months before he took over as chief executive of what was then, in December of last year, the world’s biggest bank. He was supposed to steady the ship after the departure of Chuck Prince a month earlier, but even then the financial storm was making that almost impossible.

The former Morgan Stanley investment banker had joined Citigroup in May last year and neither he nor Sir Win Bischoff, the bank’s chairman deserve blame for the toxic rag-bag of businesses patched together by Mr Prince and Sandy Weill, but it has fallen to Mr Pandit to cut costs, find new capital sources and seek ways to cleanse its bloated portfolio of collateralised debt obligations. In the past month, he has sought to effect emergency measures for a bank experiencing severe distress. He unveiled plans to cut 52,000 jobs worldwide to cut costs and at the weekend was exploring means of securing new capital.

It is understood that although the US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation have tried to sound out other financial institutions to see whether they would buy Citigroup, they have received a lukewarm response.

The real threat that Mr Pandit faces, however, is not from the ferocity of the American recession but from Citigroup’s own shareholders. The stock has fallen by 90 per cent over the past 12 months and investors could see the value of their shares fall further if Washington seizes a stake in the bank. Ironically, Mr Pandit’s plan to create a “bad bank”, in which Citi's toxic assets would be put, is close to the proposed SIV fund his predecessor sought to create. Mr Pandit recognises that Citigroup’s biggest weakness, its size and diversity, is also its biggest strength. The bank, although unwieldy, is not as vulnerable to the whims of individual clients as Lehman Brothers was.

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