Management would address the company's issues "head-on", he said, five weeks after Citi revealed potential mortgage-related losses of up to $11bn prompting Chuck Prince's resignation as chairman and chief executive.
In a surprise move, Sir Win Bischoff, the former chairman of Citi's European business who has been serving as interim chief executive, was named chairman.
Robert Rubin, the former Treasury secretary, who stepped up to become chairman when Mr Prince resigned, will return to his previous role as chairman of the executive committee.
Mr Rubin said in a statement that he was looking forward to "a long and active role at Citi".
A key adviser to Mr Prince and his predecessor, Sandy Weill, Mr Rubin has been reluctant to take on a bigger formal job at the company. However, there had been speculation that he might be persuaded to stay on as chairman, following criticism of his role at the company during the recent years of poor performance.
Mr Pandit faces formidable challenges in turning round Citi which was forced to raise $7.5bn from the Abu Dhabi Investment Authority last month to shore up its overstretched balance sheet.
Citi has been one of the biggest casualties of the credit squeeze because its investment bank had large holdings of US subprime mortgage-related securities. It has also struggled to improve the performance of its US retail financial services businesses.
Citi's share price has fallen more than 40 per cent this year amid growing calls for the company to be broken up.
The board has strongly supported Mr Prince's strategy of keeping the group together. Some observers believe it is more likely that Mr Pandit will pursue the same strategy than if an outsider had been appointed.
The appointment of Mr Pandit, a former senior Morgan Stanley executive who joined Citi this year, had been widely forecast. Citi's shares fell in line with other banks on Tuesday after the Federal Reserve cut rates.
Some observers have questioned the choice of Mr Pandit, 50, who has no experience of running a large public company and has never worked in retail financial services.