Embattled financial services giant Citigroup is expected to take another mega write-down of $8 billion-$11 billion on top of the $5.9 billion write-down the bank took in early October, according to reports coming out of New York City.
The huge write-down is necessary in view of the falling value of sub-prime mortgage securities held by Citi.
On Sunday, Citi also set up an exclusiveÂ new unit to manage its disastrous exposure to sub-prime mortgage securities. Citi’s exposure to sub-prime mortgage securities is a humongous $55 billion.
As expected, at Citi’s emergency board meeting today Charles Prince resigned. In a statement, Prince said:
[I]t is my judgment that given the size of the recent losses in our mortgage- backed securities business, the only honorable course for me to take as Chief Executive Officer is to step down.
Meanwhile Citi’s boardÂ named the head of its European operations Win Bischoff as interim CEO and Senior Advisor and former U.S. Treasury Secretary Robert Rubin as Chairman. A special commitee will look for a new CEO.
Once acknowledged as one of the finest financial services firmsÂ in the world, Citi today is a caricature.
On Sunday night, the WSJ (subscription required) wrote:
A decade after Sanford Weill built the insurance-to-banking-to-stockbroking behemoth through a run of acquisitions, his creation remains an often dysfunctional collection of businesses whose employees sometimes ignore or even compete against each other.
Among those mentioned as potential successors to Prince are NYSE Euronext CEO John Thain and AIG Chairman and Citi alumnus Robert Willumstad.
But in the murkyÂ corporate world, strange things have been known to happen.
And Vikram Pandit, head of Citi’s investment banking operations, could emerge as the dark horse to succeed Charles Prince.