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.
AIR DEFENSE: The Norwegian missile system has proved highly effective in Ukraine in its war against Russia, and the US has recommended it for Taiwan, an expert said The Norwegian Advanced Surface-to-Air Missile Systems (NASAMS) Taiwan ordered from the US would be installed in strategically important positions in Taipei and New Taipei City to guard the region, the Ministry of National Defense said in statement yesterday. The air defense system would be deployed in Taipei’s Songshan District (松山) and New Taipei City’s Tamsui District (淡水), the ministry said, adding that the systems could be delivered as soon as the end of this year. The US Defense Security Cooperation Agency has previously said that three NASAMS would be sold to Taiwan. The weapons are part of the 17th US arms sale to
INSURRECTION: The NSB said it found evidence the CCP was seeking snipers in Taiwan to target members of the military and foreign organizations in the event of an invasion The number of Chinese spies prosecuted in Taiwan has grown threefold over a four-year period, the National Security Bureau (NSB) said in a report released yesterday. In 2021 and 2022, 16 and 10 spies were prosecuted respectively, but that number grew to 64 last year, it said, adding that the Chinese Communist Party (CCP) was working with gangs in Taiwan to develop a network of armed spies. Spies in Taiwan have on behalf of the CCP used a variety of channels and methods to infiltrate all sectors of the country, and recruited Taiwanese to cooperate in developing organizations and obtaining sensitive information
BREAKTHROUGH: The US is making chips on par in yield and quality with Taiwan, despite people saying that it could not happen, the official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has begun producing advanced 4-nanometer (nm) chips for US customers in Arizona, US Secretary of Commerce Gina Raimondo said, a milestone in the semiconductor efforts of the administration of US President Joe Biden. In November last year, the commerce department finalized a US$6.6 billion grant to TSMC’s US unit for semiconductor production in Phoenix, Arizona. “For the first time ever in our country’s history, we are making leading edge 4-nanometer chips on American soil, American workers — on par in yield and quality with Taiwan,” Raimondo said, adding that production had begun in recent
Seven hundred and sixty-four foreigners were arrested last year for acting as money mules for criminals, with many entering Taiwan on a tourist visa for all-expenses-paid trips, the Criminal Investigation Bureau (CIB) said on Saturday. Although from Jan. 1 to Dec. 26 last year, 26,478 people were arrested for working as money mules, the bureau said it was particularly concerned about those entering the country as tourists or migrant workers who help criminals and scammers pick up or transfer illegally obtained money. In a report, officials divided the money mules into two groups, the first of which are foreigners, mainly from Malaysia
RSS