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Citigroup bank boss 'steps down' Citigroup bank boss 'steps down'
(10 minutes later)
The boss of the Citigroup bank, Charles Prince, has resigned, according to reports in the Wall Street Journal.The boss of the Citigroup bank, Charles Prince, has resigned, according to reports in the Wall Street Journal.
The newspaper said that he would be replaced by the former US Treasury Secretary Robert Rubin.The newspaper said that he would be replaced by the former US Treasury Secretary Robert Rubin.
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.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.
Citigroup, which has yet to confirm the resignation, is the latest finance firm to be hit by the credit crisis.Citigroup, which has yet to confirm the resignation, is the latest finance firm to be hit by the credit crisis.
The head of Merrill Lynch recently resigned after reporting heavy losses.The head of Merrill Lynch recently resigned after reporting heavy losses.
Under expectations Below expectations
The latest spate of poor earnings reports from US banks have prompted concerns that the worst of the credit crisis may be yet to come.The latest spate of poor earnings reports from US banks have prompted concerns that the worst of the credit crisis may be yet to come.
Speculation about the future of Citigroup has intensified since Friday, when the Wall Street Journal said the firm's board was set for an emergency meeting on Sunday.Speculation about the future of Citigroup has intensified since Friday, when the Wall Street Journal said the firm's board was set for an emergency meeting on Sunday.
Shares ended the week 2% lower by close of trade in Friday in New York, at $37.73.Shares ended the week 2% lower by close of trade in Friday in New York, at $37.73.
In the three months to the end of September, net income dropped to $2.38bn from $5.51bn a year earlier.In the three months to the end of September, net income dropped to $2.38bn from $5.51bn a year earlier.
At the time of the results Mr Prince said: "A significant amount of our income decline was in our fixed-income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations."At the time of the results Mr Prince said: "A significant amount of our income decline was in our fixed-income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations."
On 1 October, the firm had projected a 60% drop in quarterly earnings.On 1 October, the firm had projected a 60% drop in quarterly earnings.
"This was a disappointing quarter, even in the context of the dislocations in the sub-prime mortgage and credit markets," said Mr Prince."This was a disappointing quarter, even in the context of the dislocations in the sub-prime mortgage and credit markets," said Mr Prince.
Sub-prime woes
Citigroup has been one of the most active participants in the sub-prime mortgage-backed securities market, buying billions of dollars worth of mortgages and then selling them on to international investors.Citigroup has been one of the most active participants in the sub-prime mortgage-backed securities market, buying billions of dollars worth of mortgages and then selling them on to international investors.
But since August the credit market for these types of securities has frozen up, leaving many big banks holding unsold morttgage securities whose value has taken a tumble.But since August the credit market for these types of securities has frozen up, leaving many big banks holding unsold morttgage securities whose value has taken a tumble.
The lack of a market has made it difficult for companies to evaluate the size of their potential losses.The lack of a market has made it difficult for companies to evaluate the size of their potential losses.
Overall, there are over $1 trillion worth of sub-prime mortgage-backed securities outstanding, and the Federal Reserve has estimated that the financial sector as a whole could lose at least $100bn.