NEW YORK, Nov 5 (Reuters) Charles Prince has resigned as chairman and chief executive of Citigroup Inc, which plans to take an additional billion to billion of write-downs for credit and other losses, the Wall Street Journal said on Sunday.
Robert Rubin, the former US Treasury Secretary, will become Citigroup's chairman, while Sir Win Bischoff, the chairman of Citigroup's European operations, will become interim chief executive, the newspaper said.
Citigroup did not immediately respond to a request for comment.
Prince's departure ends a tumultuous four-year tenure marked by heavy management turnover, questions over strategy, and mounting losses from bad loans and mortgages.
The added write-down would come just three weeks after Citigroup announced a .5 billion write-down for loan losses, subprime mortgages and other debt.
It would also come five days after Merrill Lynch&Co ousted its own chief executive, Stanley O'Neal, following an .4 billion write-down.
Citigroup has said it wants to boost capital, and CIBC World Markets analyst Meredith Whitney estimated that more than billion may be needed. The problems are spurring more calls for the bank to be broken up because it is too unwieldy.
''I just don't think (Prince) was the right person to run Citigroup,'' said Jim Huguet, co-chief executive of Great Companies LLC in Tampa, Florida, a Citigroup shareholder. ''He was brought in to fix their legal problems because he's a lawyer, but they need someone who is capable of really building the business, and I don't think that's Prince's forte.'' Rubin, 69, joined Citigroup in 1999 after more than four years as Treasury secretary, and chairs the bank's executive committee. He has long been a close adviser to Prince, focused on strategy rather than day-to-day operations. Before joining the Clinton administration, Rubin had spent 26 years at Goldman Sachs&Co, becoming co-chairman of the investment bank.
Bischoff assumed his present position in May 2000 after the acquisition of Schroders Plc's investment banking business by Citigroup unit Salomon Smith Barney. He had been chairman of Schroders since May 1995.
THE DANCING ENDS Prince, 57, has struggled to improve results at Citigroup, especially in U.S. consumer banking, its biggest business.
He has also been under enormous pressure to cut expenses, including from the New York-based bank's largest individual investor, Saudi Prince Alwaleed bin Talal.
While he appeared to have some success early this year, the write-down all but thwarted that goal for 2007.
Prince didn't help his cause in July when he said Citigroup was ''still dancing'' to a private equity buyout boom that was about to flame out, suggesting to investors that he didn't appreciate the risks in leveraged lending.
Citigroup also has exposure to mortgages through tens of billions of dollars of off-balance-sheet structured investment vehicles, and is in talks with rivals to set up a conduit to buy assets from troubled SIVs.
The US Securities and Exchange Commission is examining whether Citigroup accounted properly for its own SIVs, the Wall Street Journal said.
Investors have pushed Citigroup shares down 32 percent this year.
The stock is also down 17 percent since Prince in October 2003 took over as the hand-picked successor of Sanford ''Sandy'' Weill, his mentor since joining a Baltimore firm called Commercial Credit Co in 1986.
It's not clear who might become Citigroup's permanent chief executive. Upper management has undergone rapid turnover, leaving the bank without an obvious immediate successor.
Analysts have said John Thain, who runs NYSE Euronext, might be a candidate. Internal candidates may include Vikram Pandit, who oversees investment banking and alternative investments, and Chief Financial Officer Gary Crittenden. Analysts have said neither may be ready yet.
Bear Stearns Cos and Swiss bank UBS AG also shook up top management in 2007 after credit losses.
REVOLVING LEADERSHIP DOOR The first half of Prince's tenure was marked by a cleanup of ethical and regulatory problems. Citigroup paid more than billion to settle litigation, including over its work for Enron Corp and WorldCom Inc and the issuance of inflated stock research by analysts like the now-discredited Jack Grubman.
Prince bowed deeply at a October 2004 Tokyo news conference in apology for a scandal that caused the closure of Citigroup's private bank in Japan. The U.S. Federal Reserve barred the bank from acquisitions for a year while it cleaned up its house.
When Prince refocused on Citigroup's operations, he emphasized organic growth, especially outside the United States, saying Citigroup was too big to pursue the ''transformational'' acquisitions that marked Weill's tenure.
He sold asset management and insurance units, and added branches and lending offices for the stagnating US consumer banking unit.
Acquisitions, apart from a pending purchase of Japanese brokerage Nikko Cordial Corp, were small.
But revenue didn't grow fast enough, while expenses grew too much. Prince in April set 17,000 job cuts companywide.
REUTERS PBB AS0513