Citi gave no explanation at the time, but it was widely reported that Pandit had fallen out of favor with the company's board. The bank was embarrassed by several missteps including failing a financial checkup this spring with the Federal Reserve, which refused Citi's request to raise its dividend.
Pandit's replacement is Michael Corbat, who had been the CEO of Citigroup's Europe, Middle East and Africa division. He also ran Citi Holdings.
Under Corbat, many analysts expect Citigroup to pursue a strategy of more cost-cutting, more shrinking and more focus on traditional banking, like making loans. Citigroup has about 262,000 employees, and generated about $78.4 billion in revenue last year. Once the nation's largest bank, Citi is now the third-largest, behind JPMorgan Chase & Co. and Bank of America Corp.
Shares of Citi fell 25 cents to $35.91 in midday trading. The stock is up about 37 percent this year, but was decimated in the 2008 crisis and remains far below where it was when Pandit took over in 2007.