Citigroup seeks CEO and prepares for losses

Source: Exec Digital Canada

Date :11/5/2007 3:50:41 AM

Citigroup have announced the resignation of Chairman and Chief Executive Charles Prince (pictured)

Further losses

At an emergency meeting of the Citi board Sunday, the nation's largest bank announced Prince's widely expected departure, but also estimated it would take additional losses of $8 billion to $11 billion. In the third quarter, it already took a hit of $6.5 billion in asset mark-downs and other credit-related losses.

Many shareholders condemned him openly for much of his tenure, as Citigroup's stock trailed that of its peers while Prince executed what was called an umbrella model of corporate organization, with several separate lines of business. Shares closed Friday at $37.73, about 20 percent below where they were when Prince became CEO.

To date, Mr. Prince is the highest profile victim of the credit crunch that has cost financial institutions across the world billions. For Wall Street, however, signs that the crisis is over are worryingly scarce as house prices continue to slump, a further result of sub-prime lending.

Mr. Prince said of his departure: "We have made strong progress in our strategy for building for the future, evidenced in the momentum we have achieved in most of our businesses.

Unavoidable

“Nevertheless, it is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honorable course for me to take as Chief Executive Officer is to step down. This is what I advised the Board.

"It has been my privilege to lead this powerful diversified financial services company for the past four years and to be affiliated with the directors, shareholders and employees of Citi and its predecessor companies for the past 29 years.

“I am proud of the significant progress we have made in rapidly building and expanding the scope of our businesses internationally, strengthening our businesses domestically, and restoring excellent relationships with our regulators throughout the world."

November 5, 2007