The crisis of leadership at Citigroup Inc was rumored to be close to a climax over the weekend amid widespread speculation that CEO Charles Prince will resign, undermined by widening losses from bad mortgage debts and disgruntled shareholders who have suffered a 31 percent loss in the market capitalization of the largest US bank.
Just a week after New York-based Merrill Lynch & Co ousted Stan O'Neal, Citigroup provided no comment on front-page stories throughout the US that said Prince, 57, will step down.
"This might become a weekly occurrence, getting rid of a Wall Street CEO," said James Ellman, who manages about US$200 million as president of Seacliff Capital in San Francisco.
Citigroup's board was to hold an emergency meeting this weekend, the Wall Street Journal reported, citing unidentified people familiar with the situation.
"We are completely declining to comment," said Leah Johnson, a Citigroup spokeswoman and member of the New York-based firm's management committee.
The biggest US bank by assets reported US$6.5 billion in writedowns and losses in the third quarter, casting doubt on the length of Prince's tenure.
"The board may have simply reached the point where they can't take the pressure from stockholders and they have to remove him," Punk Ziegel & Co analyst Richard Bove said in an interview.
The US Securities and Exchange Commission (SEC) is looking into how Citigroup accounted for certain transactions in a banking-industry rescue plan, the Journal reported, citing people familiar with the matter. Specifically, it's reviewing whether the company properly accounted for US$80 billion in structured investment vehicles, the newspaper said, citing one of those people.
The result of the review, still in early stages, could include no action or a referral to the SEC's enforcement division, the Journal said.
The company's SIV accounting is "in thorough accordance with all applicable rules and regulations," bank spokeswoman Christina Pretto told the newspaper.
Citigroup rose US$1.31, or 3.5 percent, to US$39.04 in extended trading on Friday. Shares have dropped 32 percent this year.
Robert Rubin, the former US Treasury secretary and chairman of Citigroup's executive committee, may be asked to serve temporarily as CEO, Dow Jones reported.
Rubin is "reluctant" to take the job, the news service said.
Other possible replacement candidates, according to the Journal, include Richard Parsons, a Citigroup board member who is expected to step down as CEO of Time Warner Inc later this year, and NYSE Euronext CEO John Thain.
The best way for the company to return value to shareholders is to break into three separate companies, a consumer bank, an investment bank and a wealth-management brokerage, William Smith, president of Smith Asset Management, said in an interview.
"They've got to put a close to this chapter, they've got to put some morale back into the company," he said.
Smith said Citigroup chief financial officer Gary Crittenden is capable of overseeing the dismantling and that Sallie Krawcheck, head of the global wealth management division, could run that company afterward.
Banks, securities firms and insurers have declined on concern that more writedowns and losses lie ahead for their holdings of bonds and securities backed by home mortgages, as well as corporate loans. The worst housing slump in 16 years has led to record US foreclosures and brought trading in some mortgage bonds to a standstill as their value fell.
Prince would join a growing list of investment bank executives who have lost their jobs because of losses in the fixed-income markets.
UBS AG, the biggest Swiss bank, dismissed CEO Peter Wuffli in July.
MISINFORMATION: The generated content tends to adopt China’s official stance, such as ‘Taiwan is currently governed by the Chinese central government,’ the NSB said Five China-developed artificial intelligence (AI) language models exhibit cybersecurity risks and content biases, an inspection conducted by the National Security Bureau (NSB) showed. The five AI tools are: DeepSeek, Doubao (豆包), Yiyan (文心一言), Tongyi (通義千問) and Yuanbao (騰訊元寶), the bureau said, advising people to remain vigilant to protect personal data privacy and corporate business secrets. The NSB said it, in accordance with the National Intelligence Services Act (國家情報工作法), has reviewed international cybersecurity reports and intelligence, and coordinated with the Ministry of Justice Investigation Bureau and the National Police Agency’s Criminal Investigation Bureau to conduct an inspection of China-made AI language
LIMITS: While China increases military pressure on Taiwan and expands its use of cognitive warfare, it is unwilling to target tech supply chains, the report said US and Taiwan military officials have warned that the Chinese People’s Liberation Army (PLA) could implement a blockade within “a matter of hours” and need only “minimal conversion time” prior to an attack on Taiwan, a report released on Tuesday by the US Senate’s China Economic and Security Review Commission said. “While there is no indication that China is planning an imminent attack, the United States and its allies and partners can no longer assume that a Taiwan contingency is a distant possibility for which they would have ample time to prepare,” it said. The commission made the comments in its annual
CHECKING BOUNDARIES: China wants to disrupt solidarity among democracies and test their red lines, but it is instead pushing nations to become more united, an expert said The US Department of State on Friday expressed deep concern over a Chinese public security agency’s investigation into Legislator Puma Shen (沈伯洋) for “secession.” “China’s actions threaten free speech and erode norms that have underpinned the cross-strait ‘status quo’ for decades,” a US Department of State spokesperson said. The Chongqing Municipal Public Security Bureau late last month listed Shen as “wanted” and launched an investigation into alleged “secession-related” criminal activities, including his founding of the Kuma Academy, a civil defense organization that prepares people for an invasion by China. The spokesperson said that the US was “deeply concerned” about the bureau investigating Shen
‘TROUBLEMAKER’: Most countries believe that it is China — rather than Taiwan — that is undermining regional peace and stability with its coercive tactics, the president said China should restrain itself and refrain from being a troublemaker that sabotages peace and stability in the Indo-Pacific region, President William Lai (賴清德) said yesterday. Lai made the remarks after China Coast Guard vessels sailed into disputed waters off the Senkaku Islands — known as the Diaoyutai Islands (釣魚台) in Taiwan — following a remark Japanese Prime Minister Sanae Takaichi made regarding Taiwan. Takaichi during a parliamentary session on Nov. 7 said that a “Taiwan contingency” involving a Chinese naval blockade could qualify as a “survival-threatening situation” for Japan, and trigger Tokyo’s deployment of its military for defense. Asked about the escalating tensions
RSS