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| Citigroup bank chief steps down | |
| (10 minutes later) | |
| The chairman and chief executive of the Citigroup bank, Charles Prince, has resigned, the company has announced. | |
| He will be replaced as chairman by former US Treasury Secretary Robert Rubin, while Sir Win Bischoff will serve as interim CEO. | |
| 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 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. |
| Below 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. |
| SUB-PRIME CRISIS SERIES Special reports on why bad US home loans are affecting us all Monday: Cleveland blighted Friday: US economy stalls Viewers hit by sub-prime crisis speak out Two million set to lose homes | |
| 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 | 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. | 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. |