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The board of Citigroup today accepted the resignation of its embattled chairman and chief executive, Charles O. Prince III, and appointed Robert E. Rubin, the former Treasury secretary, as its chairman, according to a person briefed on the situation.
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At an emergency meeting held today at the bank's Park Avenue headquarters, the board also appointed the chairman of its European operation, Winfried Bischoff, as its acting chief executive, this person said.
Citigroup will also announce tomorrow that it will take another $8 billion to $11 billion in write-downs, this person said. That would be in addition to the $5.9 billion that it wrote down in early October, when it reported third-quarter results.
The appointments are intended to reassure Wall Street while the board looks for a successor to Mr. Prince, whose resignation came after the company suffered major losses as a result of its large exposure to bad loans and mortgage-related securities.
Mr. Rubin, who has held the largely advisory role as chairman of the bank's executive committee, will take on a wider role, though he continues to balk at supervising the bank's daily operations. Mr. Rubin has long insisted that he does not want to take over as chief executive.
Indeed, Mr. Rubin is expected to step down from the bank altogether after board settles on a new leadership structure, this person said.
Mr. Rubin's standing at Citigroup has long been contentious. In better times, his role as a board member and chairman of the bank's executive committee was often referred to as the "best job in the world."
He has collected more than $150 million in cash and stock over eight years to serve as the bank's elder statesman, meeting with important clients and building relationships with government and business leaders around the world, though his contract states that he is to have no daily operational responsibilities.
His other role has been to serve as Mr. Prince's sounding board and biggest supporter — and to help broadly shape the bank's strategy. The bank's performance, however, has come under criticism, with Citigroup's stock remaining essentially flat from the time Mr. Prince took over in October 2003 until recently. Since a sharp downturn in the housing and credit markets began in August, the stock has dropped nearly 20 percent.
Last month, Citigroup's third-quarter earnings fell 57 percent after it took the write-off and virtually all of its businesses took heavy losses. And the problems continue to mount. At a meeting today, Citigroup's board is expected to be briefed on the possibility of even greater losses.
Mr. Rubin, however, has emerged largely unscathed. Executives say he offers advice but does not insist that people act on it. And he has long been adamant that he has no responsibility for the decisions made by Mr. Prince and Citigroup's other leaders.
That contrast has allowed Mr. Rubin to float above the fray, even as he has helped guide the bank during Mr. Prince's tumultuous tenure. Now, some suggest that the turmoil has tarnished Mr. Rubin's credentials.
"You have to ask yourself why he would be temporary chairman if all these problems happened under his auspices," said Douglas A. Kass, a hedge fund investor at Seabreeze Partners Management in Palm Beach, Fla. "Four or six months ago, I would have said it would be a great remedy to replace Prince with Rubin. Now, I am not so certain."
Of course, the board may already be pursuing other options for the job of acting chief executive. Vikram S. Pandit, who took over Citigroup's investment banking operation in early October, just six months after joining the bank, is one contender.
Mr. Pandit's love of complex, technical problems and his years of experience in dealing with clients, risk and the more arcane aspects of what makes investment banks run at Morgan Stanley has piqued his curiosity, according to people close to him.
But as of late morning Saturday, no one on the board had reached out to him, these people say. Other potential candidates include Robert Druskin, the company's chief operating officer; and Gary L. Crittenden, its recently named finance chief. They might join Mr. Rubin or other high-ranking bank executives as part of a larger committee overseeing the bank.
Landon Thomas Jr. and Gretchen Morgenson contributed reporting.
Skip to next paragraph
At an emergency meeting held today at the bank's Park Avenue headquarters, the board also appointed the chairman of its European operation, Winfried Bischoff, as its acting chief executive, this person said.
Citigroup will also announce tomorrow that it will take another $8 billion to $11 billion in write-downs, this person said. That would be in addition to the $5.9 billion that it wrote down in early October, when it reported third-quarter results.
The appointments are intended to reassure Wall Street while the board looks for a successor to Mr. Prince, whose resignation came after the company suffered major losses as a result of its large exposure to bad loans and mortgage-related securities.
Mr. Rubin, who has held the largely advisory role as chairman of the bank's executive committee, will take on a wider role, though he continues to balk at supervising the bank's daily operations. Mr. Rubin has long insisted that he does not want to take over as chief executive.
Indeed, Mr. Rubin is expected to step down from the bank altogether after board settles on a new leadership structure, this person said.
Mr. Rubin's standing at Citigroup has long been contentious. In better times, his role as a board member and chairman of the bank's executive committee was often referred to as the "best job in the world."
He has collected more than $150 million in cash and stock over eight years to serve as the bank's elder statesman, meeting with important clients and building relationships with government and business leaders around the world, though his contract states that he is to have no daily operational responsibilities.
His other role has been to serve as Mr. Prince's sounding board and biggest supporter — and to help broadly shape the bank's strategy. The bank's performance, however, has come under criticism, with Citigroup's stock remaining essentially flat from the time Mr. Prince took over in October 2003 until recently. Since a sharp downturn in the housing and credit markets began in August, the stock has dropped nearly 20 percent.
Last month, Citigroup's third-quarter earnings fell 57 percent after it took the write-off and virtually all of its businesses took heavy losses. And the problems continue to mount. At a meeting today, Citigroup's board is expected to be briefed on the possibility of even greater losses.
Mr. Rubin, however, has emerged largely unscathed. Executives say he offers advice but does not insist that people act on it. And he has long been adamant that he has no responsibility for the decisions made by Mr. Prince and Citigroup's other leaders.
That contrast has allowed Mr. Rubin to float above the fray, even as he has helped guide the bank during Mr. Prince's tumultuous tenure. Now, some suggest that the turmoil has tarnished Mr. Rubin's credentials.
"You have to ask yourself why he would be temporary chairman if all these problems happened under his auspices," said Douglas A. Kass, a hedge fund investor at Seabreeze Partners Management in Palm Beach, Fla. "Four or six months ago, I would have said it would be a great remedy to replace Prince with Rubin. Now, I am not so certain."
Of course, the board may already be pursuing other options for the job of acting chief executive. Vikram S. Pandit, who took over Citigroup's investment banking operation in early October, just six months after joining the bank, is one contender.
Mr. Pandit's love of complex, technical problems and his years of experience in dealing with clients, risk and the more arcane aspects of what makes investment banks run at Morgan Stanley has piqued his curiosity, according to people close to him.
But as of late morning Saturday, no one on the board had reached out to him, these people say. Other potential candidates include Robert Druskin, the company's chief operating officer; and Gary L. Crittenden, its recently named finance chief. They might join Mr. Rubin or other high-ranking bank executives as part of a larger committee overseeing the bank.
Landon Thomas Jr. and Gretchen Morgenson contributed reporting.