Turmoil in subprime mortgages and credit markets has possibly claimed its second victim.
Chairman and CEO of financial giant Citigroup Charles Prince plans to resign at a board meeting on Sunday in face of fresh losses from distressed mortgage assets leading to a $5-billion write-down and sharp drop in profits, media reports said on Saturday.
The move would end the four-year tenure of Prince, a longtime lawyer and loyal lieutenant of former Citigroup head Sanford Weill, who assembled the financial giant that stands as America's largest bank by assets, the Wall Street Journal reported.
It would make Prince the second major chief executive in finance to leave his job in a week, following the ouster of Merrill Lynch's Stan O'Neal.
At Sunday's meeting, the New York Times said directors are also expected to formally accept his resignation and discuss the possibility of another write-off, just weeks after announcing large losses related to subprime mortgages and the credit market turmoil.
Prince moved before the board considered his fate. Noting that his tenure has been rocky, the Journal said he faced pressure to cut costs, and more recently, debt-market turmoil has taken a tremendous toll.
Citigroup's stock is down 31 per cent this year and almost 9 per cent in the last week. People familiar with the matter were quoted as saying that the Securities and Exchange Commission (SEC) is looking into the bank's accounting for its off-balance sheet investment funds that have recently attracted scrutiny.
Prince's exit, the Times said, will end a tumultuous four-year reign at the bank, where he won over the board with an aggressive growth strategy but failed to convince Wall Street investors and many of his own employees. It will also set off a new round of calls to dismantle Citigroup's sprawling empire.
Just a few weeks ago, the Journal said, board members including Robert Rubin, the influential chairman of Citigroup's executive committee, expressed support for Prince and said that his job wasn't in jeopardy.
Citigroup may report further losses on Monday, reflecting continued declines in the value of some mortgage-linked securities since the third quarter ended September 30, people familiar with the matter were quoted as saying.
The SEC is reviewing how Citigroup accounted for certain off-balance-sheet transactions that are at the heart of a banking-industry rescue plan, it said quoting people familiar with the matter.
One candidate often discussed as a successor to Prince is NYSE Euronext chief executive John Thain, the Journal said, adding that he spent more than 20 years at Goldman Sachs, rising from trader to president.
The Journal said Prince doesn't have an employment contract or any specified termination benefits, beyond his pension. But he appears to be eligible to depart with cash and equity valued at roughly $31 million, according to Citigroup's filings with the SEC.
Most of that - roughly $28 million - reflects the value of approximately 744,000 shares of restricted stock that Prince was granted over the past four years, based on Friday's 4 p.m. price of $ 37.73.
