November 5, 2007 in Nation/World

Rubin will take helm at Citgroup

Madlen Read Associated Press
 
The Spokesman-Review photo

Rubin
(Full-size photo)

NEW YORK – Citigroup Inc. Chairman and Chief Executive Charles Prince, beset by the company’s billions of dollars in losses from investing in bad debt, resigned Sunday and is being replaced as chairman by former Treasury Secretary Robert E. Rubin.

The nation’s largest banking company announced Prince’s widely expected departure in a statement after an emergency meeting of its board. Citi also said Sir Win Bischoff, chairman of Citi Europe and a Member of the Citi management and operating committees, would serve as interim CEO. Rubin, a former co-chairman of Goldman, Sachs & Co., has served as the chair of Citi’s executive committee, and it was also expected he would take a greater role in leading the company.

In a separate statement, Citi, which took a hit of $6.5 billion from asset write-downs and other credit-related losses in the third quarter, said it would take an additional $8 billion to $11 billion in write-downs.

“It was the honorable course, given the losses we are now announcing,” Rubin said of Prince’s resignation.

Prince joined former Merrill Lynch & Co. CEO Stan O’Neal, who resigned from the investment bank last month, as the highest-profile casualties of the debt crisis.

Prince, 57, became chief executive of Citigroup in October 2003.

His position looked especially shaky after the company on Oct. 1 estimated that third-quarter profit would decline about 60 percent to some $2.2 billion after seeing nearly $6 billion in credit costs and write-downs of overly leveraged corporate debt and souring home mortgages. At that time, Prince said the bank’s earnings would return to normal in the fourth quarter.

But when Citigroup released its third-quarter results two weeks later, the write-downs and credit costs exceeded $6 billion, and Chief Financial Officer Gary Crittenden indicated the outlook going forward wasn’t as upbeat as Prince had predicted.

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