Citigroup Inc Chief Executive Vikram Pandit said he expects the No. 3 U.S. bank to rebound from its current woes and pledged that it would repay every dollar it owes to the U.S. government.

Pandit commented on the bank's prospects on Tuesday at the annual shareholders' meeting, which came just days after the bank posted a $1.59 billion first-quarter profit before payments of preferred dividends to the U.S. Treasury.

I intend to see this through, Pandit told shareholders. The Financial Times newspaper reported that senior Federal Deposit Insurance Corp officials had privately discussed who might replace Pandit if the bank needed more government aid.

Pandit, asked why Citi's recently named Chief Financial Officer Edward Ned Kelly responded to analysts' questions about first quarter earnings last week, said it was only fair to let Kelly deliver the good news.

The FT reported that Kelly was a candidate to replace Pandit if regulators opt to remove him.

The degree to which more aid is needed may be decided in early May when U.S. regulators are expected to complete stress tests to determine how well the nation's largest lenders would fare if the recession proves to be deep and long.

Citigroup Chairman Richard Parsons said at the shareholders' meeting that working with regulators on the stress test was now the bank's biggest focus.

Citi has already received $45 billion of taxpayer-funded capital since October.

At the meeting, Citigroup shareholders are expected to vote on whether to install four new directors, including former U.S. Bancorp Chief Executive Jerry Grundhofer.

They are also expected to decide whether to reappoint some existing directors who were responsible for oversight as the bank's troubles mushroomed.

Earlier this month, shareholder advisory firm RiskMetrics Group Inc and the influential pension fund California Public Employees Retirement System said they opposed votes in favor of re-electing to the board C. Michael Armstrong, John Deutch and Alain Belda. Armstrong and Deutch are audit committee members, and Belda is a former lead director.

Citigroup shares were up 29 cents, or 9.9 percent, at $3.23 in afternoon trading, outperforming the KBW Banks index <.BKX>, which was up 5.4 percent.

Over the past year, Citi shares have lost 87 percent of their value, compared with a 57 percent drop in the sector over the same period.

(Writing by Christian Plumb and Jonathan Stempel; editing by John Wallace and Tim Dobbyn)

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