Vikram Pandit shocked Wall Street Tuesday, abruptly stepping down as CEO of Citigroup after steering the bank through the 2008 financial crisis and the choppy years that followed.

Pandit’s replacement, effective immediately, is Michael Corbat, who had been CEO of Citigroup’s Europe, Middle East and Africa division, the bank said. Corbat has worked at Citi and its predecessors since he graduated from Harvard in 1983, the bank said.

Pandit also will relinquish his seat on Citi’s board of directors. A second top executive also resigned as part of the shake-up: President and Chief Operating Officer John Havens, who also served as CEO of Citi’s Institutional Clients Group.

The move followed a clash with the company’s board over strategy and performance at businesses, including its Institutional Clients Group, The Wall Street Journal reported.

Shareholders also have objected to Pandit’s massive pay packages. He received $15 million in 2011.

The news came as a surprise, and Citigroup offered no explanation. There was no hint Monday, when the bank announced strong third-quarter earnings.

During an analyst call that lasted an hour and 40 minutes – and a shorter call with reporters – no one asked bank executives how long Pandit planned to stay, or whether there was a succession plan in place.

The strong quarter sent Citigroup’s stock price to its highest level since early April.

Complete, unexpected break

Pandit’s departure from the board is a clear indication that “this was a complete and unexpected break” between Pandit and Citi directors, said Chris Whalen, a bank analyst and senior managing director of Tangent Capital Partners in New York.

“This shows how dysfunctional this organization is, to have this event unfold this way,” Whalen said. “They should have told us yesterday, unless they didn’t know.”

Still, Whalen said he does not expect the changes to mark a shift in strategic direction for the bank.

“They needed new leadership to put a face on it,” he said.

Pandit is credited with slimming the bank by selling businesses, removing it from government ownership after a bailout in 2008 and righting its balance sheet after billions in losses on bad mortgage investments made before he took the helm.

Today, Citi is the country’s third-largest bank, with $1.9 trillion in assets, according to the Federal Reserve. It trails only JPMorgan Chase, with $2.3 trillion, and Bank of America, with $2.1 trillion.

Pandit’s lavish pay packages have raised the ire of investors. And some in government believed the bank was too slow to address its problems as they emerged in the months before the crisis caught fire in September 2008.

Pandit, 55, said in a statement Tuesday that “now is the right time for someone else to take the helm at Citigroup” after the bank “emerged from the financial crisis as a strong institution.”

Both Pandit and Corbat sent memos to Citi’s 262,000 employees early Tuesday. Pandit did not say why he was leaving, but gave the impression that he felt he had completed a mission.

“There is nothing better than our third-quarter earnings announcement to demonstrate definitively that we have turned this company around,” he wrote.

Corbat said he was humbled and excited, calling himself “a true believer in this company.” He praised Pandit for leading Citi “back to its roots as a bank.”

Corbat also noted the challenges ahead – “regulatory, legislative and economic changes around the world present headwinds as we redefine our relationships with all of our stakeholders.”

Pandit joined Citigroup in 2007 and rose to CEO in December 2007.

He suffered a bruising embarrassment as the financial crisis erupted in September 2008 when his bank’s planned purchase of Wachovia was undercut by Wells Fargo. And, despite its third-quarter results, Citigroup’s recovery has been uneven.