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| Citigroup chief executive resigns |
| Charles Prince, the chairman and chief executive of one of the world's biggest banks, Citigroup, has resigned
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| UNITED STATES OF AMERICA
, 5-November-2007
9:27:5 AM |
| He will be replaced as chairman by former US Treasury Secretary Robert Rubin, while Sir Win Bischoff will serve as interim chief executive.
Investor calls for Mr Prince to go have increased since the bank reported a 57% drop in quarterly profits, after losses in the sub-prime mortgage market.
He is the second head of a leading US bank to step down within a week.
The head of Merrill Lynch, Stan O'Neal, resigned after reporting heavy losses.
After Mr Prince stepped down, Citigroup revealed that it was facing losses of between $8bn and $11bn in previously undisclosed losses due to a decrease in the value of its $55bn portfolio of sub-prime loans.
And it warned that there could be further losses to come in its trading positions in sub-prime mortgages if its hedging operations did not succeed.
Citigroup shares fell 4.6% in early trading.
'Structure is broken'
"Given the size of the recent losses in our mortgage- backed securities business, the only honourable course for me to take as chief executive officer is to step down," Mr Prince said on Sunday.
But some analysts say that the sub-prime losses were just the last straw.
"When you look at the trillions of dollars in assets that Citi has and you're talking about potential exposure of maybe $15bn: it's bad but it's not the end of the world," said Bill Smith from Smith Asset Management in New York.
"The actual structure of Citigroup is broken - it's too big, it's too bloated and we think it should be broken up into three of four pieces," he added.
The board of Citigroup paid tribute to Mr Prince, with Alain Belda saying: "We thank Chuck for his unwavering commitment to Citi, its employees and its shareholders."
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