Citi Shakeup Fails to Register
Updated from 8:30 a.m.
Citi (C) shares continued to swoon Monday in spite of a long-awaited management change.
CEO Chuck Prince resigned late Sunday, giving way to Bob Rubin as chairman and former Schroders chief Win Bischoff as interim CEO. The news of Prince's departure was expected after rumors started swirling Friday that Citi's board was planning an emergency meeting this weekend.
But while investors will surely be pleased that Prince's four-year reign is over, they aren't happy about what finally pushed him out. Citi said it would take writedowns of $8 billion to $11 billion to cover additional losses on mortgage-backed securities and collateralized debt obligations.A writedown of that magnitude would make Citi Wall Street's biggest loser, at least so far, on this year's collapse of the markets for risky paper. Merrill Lynch (MER) last week ousted CEO Stan O'Neal after the firm posted a $7.9 billion writedown on CDOs and subprime mortgages.
DeCambre Takes a Closer Look
Investors are now keeping an eye on other securities firms for exposure to bad paper. Among the most closely scrutinized now are Goldman Sachs (GS), whose third-quarter profit was viewed by some as incredibly strong given the market conditions, and Bear Stearns (BSC), the firm whose internal hedge funds collapsed this summer, signaling the first casualties of the subprime mortgage storm.
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