Dec. 12 (Bloomberg) -- Vikram Pandit, Citigroup Inc.'s newly appointed chief executive officer, may cut costs and sell assets to shore up capital in the face of growing mortgage losses.

``Nothing is off the table,'' Pandit, 50, said in an interview. Each of Citigroup's businesses will be scrutinized ``objectively and dispassionately'' as part of a ``front-to-back review'' of expenses and productivity, he said.

Citigroup picked Pandit, a former Morgan Stanley president who joined less than six months ago, to succeed Charles O. Prince, who was forced to step down when the biggest U.S. bank said mortgage-related writedowns may reach $11 billion in the fourth quarter. Citigroup's credit rating -- currently AA from Standard & Poor's -- is being reviewed for a possible downgrade.

``Citi is the worst-capitalized bank of its peers by a longshot,'' CIBC World Markets analyst Meredith Whitney said in an interview.

Citigroup, based in New York, has faced shareholder criticism for more than a year, including complaints in July 2006 from the bank's largest individual investor, Saudi billionaire Alwaleed bin Talal, over escalating corporate expenses. Prince responded by pledging to cut expenses by 10 percent by 2009 and eliminate 17,000 jobs.

``The most important priority to focus on is productivity,'' Pandit said yesterday on a conference call with analysts. He said he'll ``make sure we're looking at our cost structure.''

Game Plan

A 22-year Morgan Stanley veteran, Pandit joined Citigroup in July as head of alternative investments, was promoted in October to oversee all trading and investment banking and now runs the whole company. The bank has more than 300,000 employees in 100 countries, including consumer branches that Pandit has no experience managing.

``As big an organization as Citi is, it's going to take a while for Pandit to get his arms around it and to go through that segment analysis,'' said Eric Boyce, who helps manage $1.5 billion at Hester Capital Management in Austin, Texas, including Citigroup shares. ``Pandit is receptive to going in a new direction and not following the Prince game plan, which obviously didn't bring value to shareholders.''

Citigroup has fallen 40 percent this year in New York Stock Exchange composite trading, the worst performance in the Dow Jones Industrial Average. The stock fell yesterday to $33.23, close to a five-year low. The KBW Bank Index dropped 5.2 percent, as some investors and economists said a quarter-point cut in the Fed's benchmark interest rate to 4.25 percent may not be enough to avert a recession.

Capital Decline

``Our expectations were in line with the market's expectations,'' Pandit said. ``Today's price action is not necessarily unique, and it's not unlike some of the action we've seen in the last many weeks.''

The bank announced the appointments one minute before the Fed reported its quarter-point reduction, sending stocks down the most in two weeks. Bank of America Corp. and Citigroup led all 93 companies in the S&P 500 Financials Index lower.

Citigroup faces its worst financial crisis since 1991, when predecessor company Citicorp had to suspend dividend payments to shareholders for three years and seek a $590 million investment from Alwaleed.

The bank's Tier 1 capital -- a cushion against bad loans that's monitored by regulators -- fell to $92.4 billion as of Sept. 30, or 7.3 percent of risk-adjusted assets. The ratio, while higher than the 6 percent required for a ``well- capitalized'' bank, was down from 8.6 percent a year earlier and below the 7.5 percent threshold Citigroup has set as its goal.

$30 Billion Infusion?

``It cannot be ruled out that a major business unit or more may be monetized,'' CreditSights Inc. analyst David Hendler said yesterday in a report.

Citgroup raised $7.5 billion last month by selling preferred stock to the ruling family of Abu Dhabi. CIBC's Whitney said Citigroup still needs to raise $30 billion more, and may have to cut its dividend. The dividend of $2.16 on an annual basis amounts to about $2.7 billion a quarter.

The bank's board may not give Pandit the option of cutting the payout.

``We said in early November that we weren't going to change'' the dividend, said former U.S. Treasury Secretary Robert Rubin, a board member who chairs Citigroup's executive committee. ``I have no real reason to think there will be a change.''

Willumstad, Bischoff

Pandit was chosen following a five-week search led by Time Warner Inc. and Citigroup director CEO Richard ``Dick'' Parsons. Parsons wasn't available to comment, Time Warner spokesman Ed Adler said.

Other candidates interviewed by the search committee include Robert Willumstad, a former Citigroup executive who's now chairman of American International Group Inc. and managing partner of private-equity firm Brysam Capital Partners.

Citigroup's board named Win Bischoff, 66, the bank's senior-most executive in Europe, to be nonexecutive chairman. Bischoff joined Citigroup in 2000 following its acquisition of Schroders Plc's investment-banking business. Bischoff had been chairman of London-based Schroders.

Pandit, the son of an Indian businessman, came to the U.S. at age 16 in 1973. He has bachelor's and master's degrees in electrical engineering at Columbia University, where he also got a Ph.D. in finance. In 1983, he joined Morgan Stanley, where worked as an investment banker and trading manager at Morgan Stanley for 22 years before quitting in 2005 amid a power struggle with then-CEO Philip Purcell.

Meteoric Rise

Pandit founded his own hedge fund, Old Lane LP, in 2006, and then sold it for $800 million a year later to Citigroup, where he took a job reporting to Prince.

``It's a meteoric rise for him, and obviously, I hope he does really well, but I don't know, number one, if he's capable and number two, if the structure of the company is correct,'' said William Smith, who oversees about $80 million, including about 70,000 Citigroup shares, as senior portfolio manager of Smith Asset Management in New York. ``It's broken.''