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Citigroup CEO Prince to succeed Weill as chairman

Written by: Staff
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NEW YORK, Mar 22 (Reuters) Cementing his power atop the largest U.S. bank, Citigroup Inc. Chief Executive Charles Prince will take on the additional role of chairman, replacing Sanford ''Sandy'' Weill, who will become chairman emeritus.

The retirement of Weill, perhaps Wall Street's foremost dealmaker, is effective at New York-based Citigroup's April 18 annual meeting. Prince, 56, had replaced Weill, who turned 73 last Thursday, as chief executive two and a half years ago.

Prince's reign has been marked by the cleanup of ethical and regulatory problems, the departure of several top executives, concern over growth prospects, and a share price that has lagged many of its peers.

''Prince is going to be around a while, and has solidified his role with the board,'' said Ralph Cole, who helps invest NEW YORK, Mar 22 (Reuters) Cementing his power atop the largest U.S. bank, Citigroup Inc. Chief Executive Charles Prince will take on the additional role of chairman, replacing Sanford ''Sandy'' Weill, who will become chairman emeritus.

The retirement of Weill, perhaps Wall Street's foremost dealmaker, is effective at New York-based Citigroup's April 18 annual meeting. Prince, 56, had replaced Weill, who turned 73 last Thursday, as chief executive two and a half years ago.

Prince's reign has been marked by the cleanup of ethical and regulatory problems, the departure of several top executives, concern over growth prospects, and a share price that has lagged many of its peers.

''Prince is going to be around a while, and has solidified his role with the board,'' said Ralph Cole, who helps invest $2.3 billion at Ferguson, Wellman Capital Management in Portland, Oregon.

''My biggest concern is that while he has improved governance, that hasn't translated to improved earnings or growth, or a higher share price,'' Cole said.

Through Monday, Citigroup shares had risen 4 per cent under Prince, while the Philadelphia KBW Bank Index rose 23 per cent.

Citigroup last year posted a $19.8 billion profit from continuing operations, but revenue grew just 5 per cent.

Alain Belda, Citigroup's lead director and the chief executive of aluminum producer Alcoa Inc., said the added title is recognition of Prince's ''superior leadership.'' Weill created Citigroup in 1998 when his Travelers Group merged with Citicorp. It was not immediately clear what he plans to do next. Prince, Weill and Belda were not immediately available for further comment.

CLEANUP Prince has overseen multibillion-dollar settlements over the collapses of Enron Corp. and WorldCom Inc., and regulatory problems including the closing of Citigroup's private bank in Japan, and a controversial European bond trade.

He instituted a companywide ethics program after the Federal Reserve told the bank to avoid make big acquisitions until it cleaned up internal controls.

But several top executives have left, including second-in-command Robert Willumstad, consumer banking chief Marjorie Magner and, last week, alternative investments chief Michael Carpenter.

Prince has also dismantled the ''financial supermarket'' model that Weill, perhaps Wall Street's foremost dealmaker, created, selling life insurance and asset management units.

Weill, in a statement, said: ''I have every confidence that Chuck will take the great platform we have created and make it even better -- and create significant shareholder value.'' Citigroup's decision to give Prince the additional role of chairman drew some criticism.

''This was a wonderful opportunity for Citigroup to name an independent chairman, and this is an opportunity lost,'' said Patrick McGurn, a governance specialist at Institutional Shareholder Services. ''Citigroup, however, has an outsider as its lead director, which provides a counterbalance.'' The bank said a decision to split the roles, or have an independent chairman, depends on its best interests ''at a given point in time,'' according to its 2006 proxy statement.

Bank of America Corp., the No. 2 bank, gave Chief Executive Kenneth Lewis the added title of chairman in Jan. 2005, when Charles ''Chad'' Gifford retired. Lewis held both titles before he bought Gifford's FleetBoston Financial Corp.

Citigroup shares fell 19 cents to $47.21 in late trading on the New York Stock Exchange.

REUTERS SD VC1540 .3 billion at Ferguson, Wellman Capital Management in Portland, Oregon.

''My biggest concern is that while he has improved governance, that hasn't translated to improved earnings or growth, or a higher share price,'' Cole said.

Through Monday, Citigroup shares had risen 4 per cent under Prince, while the Philadelphia KBW Bank Index rose 23 per cent.

Citigroup last year posted a .8 billion profit from continuing operations, but revenue grew just 5 per cent.

Alain Belda, Citigroup's lead director and the chief executive of aluminum producer Alcoa Inc., said the added title is recognition of Prince's ''superior leadership.'' Weill created Citigroup in 1998 when his Travelers Group merged with Citicorp. It was not immediately clear what he plans to do next. Prince, Weill and Belda were not immediately available for further comment.

CLEANUP Prince has overseen multibillion-dollar settlements over the collapses of Enron Corp. and WorldCom Inc., and regulatory problems including the closing of Citigroup's private bank in Japan, and a controversial European bond trade.

He instituted a companywide ethics program after the Federal Reserve told the bank to avoid make big acquisitions until it cleaned up internal controls.

But several top executives have left, including second-in-command Robert Willumstad, consumer banking chief Marjorie Magner and, last week, alternative investments chief Michael Carpenter.

Prince has also dismantled the ''financial supermarket'' model that Weill, perhaps Wall Street's foremost dealmaker, created, selling life insurance and asset management units.

Weill, in a statement, said: ''I have every confidence that Chuck will take the great platform we have created and make it even better -- and create significant shareholder value.'' Citigroup's decision to give Prince the additional role of chairman drew some criticism.

''This was a wonderful opportunity for Citigroup to name an independent chairman, and this is an opportunity lost,'' said Patrick McGurn, a governance specialist at Institutional Shareholder Services. ''Citigroup, however, has an outsider as its lead director, which provides a counterbalance.'' The bank said a decision to split the roles, or have an independent chairman, depends on its best interests ''at a given point in time,'' according to its 2006 proxy statement.

Bank of America Corp., the No. 2 bank, gave Chief Executive Kenneth Lewis the added title of chairman in Jan. 2005, when Charles ''Chad'' Gifford retired. Lewis held both titles before he bought Gifford's FleetBoston Financial Corp.

Citigroup shares fell 19 cents to .21 in late trading on the New York Stock Exchange.

REUTERS SD VC1540

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