Citigroup CEO Prince resigns, is replaced as chairman by former Treasury Secy Rubin

MADLEN READ

** FILE ** Charles Prince, CEO of Citigroup, speaks at a press conference in New York, in this April 7, 2004 file photo. A report in the online edition of The Wall Street Journal on Sunday Nov. 4, 2007 says Charles Prince has resigned as Citigroup Inc. chairman and chief executive officer, and that former Treasury Secretary Robert Rubin will become the chairman of the nation's biggest banking company. (AP Photo/Diane Bondareff, File)

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 board meeting. 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.

- The Associated Press

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

"It was the honorable course, given the losses we are now announcing," Rubin said of Prince's resignation in an interview with The Associated Press.

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 that has cost billions at other financial institutions as well.

Prince, 57, became chief executive of Citigroup in October 2003. Many shareholders criticized him openly for much of his tenure, as Citigroup's stock lagged its peers while Prince executed what was called an umbrella model of corporate organization, with several separate lines of business. Shares closed Friday at $37.73, about 20 percent below where they were when Prince became CEO.

Prince's 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.