Monday, November 05, 2007

Sub-prime mortgage meltdown hits Citigroup

“Citigroup names Robert Rubin as chairman after Charles Prince exits”

Citigroup has appointed Robert Rubin, the former Treasury Secretary, to be its chairman and Sir Win Bischoff, the group’s European head, to act as interim chief executive, as it emerged that the world’s largest bank would need to take up to $11 billion (£5.3 billion) of further writedowns relating to America’s sub-prime mortgage meltdown. The appointments came after the position of Charles “Chuck” Prince, Citigroup’s chairman and chief executive, became untenable in the wake of huge mortgage-related writedowns in the third quarter and expectations of billions of dollars more to come.
Mr Prince, whose resignation was characterised as a retirement, said: “It is my judgment that, 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.”

The sheer scale of the additional losses from sub-prime-related investments, which Citigroup last night estimated at between $8 billion and $11 billion, will send shockwaves across the banking industry

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