Turmoil in subprime mortgages and credit markets has possibly claimed its second victim. Citigroup Chairman & CEO Charles Prince plans to resign at a board meeting on Sunday in face of fresh losses from distressed mortgage assets leading to $5 billion write-down and sharp drop in profits, media reports said on Saturday.
It would make Prince the second major CEO in finance to leave his job in a week, following the ouster of Merrill Lynch’s Stan O’Neal.
The move would end the four-year tenure of Prince who assembled the financial giant that stands as America’s largest bank by assets, The Wall Street Journal reported.
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.
Debt-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 & 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.
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.
One candidate often discussed as a successor to Prince is NYSE Euronext CEO John Thain, the Journal said, adding that he spent more than 20 years at Goldman Sachs, rising from trader to president.
