Financially troubled Citigroup may soon be getting a new chairman, and possibly even a new CEO.
According to The New York Times, federal banking regulators want to boot Sir Winfried Bischoff and install a new chairman who might restore investors’ trust in the onetime financial powerhouse built by former chairman and CEO Sanford I. Weill.
The depth of Citi’s financial woes is evident in its talks to sell a majority stake in its prized asset Smith Barney, as well as in reports that fourth-quarter operating losses could exceed $10 billion.
And with $45-billion worth of skin in the game (on top of its guarantees on $269 billion of illiquid mortgage assets), federal regulators are anxious to right the ship before more taxpayers’ money disappears.
According to the Times, the most likely person to assume the chairmanship is Richard Parsons, the chairman of Time Warner Inc. and a Citigroup Inc. director. Parsons assumed the top job at AOL Time Warner in 2001, and had to clean up after that ill-fated merger.
But some say that blaming Bischoff for the bank’s woes is unrealistic - all the more so since Parsons has been on Citi’s board during the time that decisions were made which have resulted in the current hemorrhaging.
“Bischoff is just a pleasant old man from overseas who was in the wrong place at the wrong time,” according to Time. “To look at media reports, the director who did all of the damage at Citi was former Treasury Secretary Robert Rubin. He is gone, but the problems he helped create are not. According to William Shakespeare, ‘The evil that men do lives after them; the good is oft interred with their bones.’ If that is true, almost no one on the bank board is likely to have a peaceful passing.”
The globetrotting Bischoff, who became chairman a year ago, had spent almost a decade as chairman of Citigroup Europe.
Most of his career was spent at the British bank, Schroders, once a family-owned merchant bank and asset manager. He worked for Schroders in Hong Kong before returning to the UK in 1983 and moving up to become chief executive. He has been with Citigroup since it acquired Schroders in 2000.
At 67, Bischoff still racks up over 100 flights a year, flying to New York for Citi’s Monday morning strategy meeting, and maintains homes in London, Italy and Gloucestershire.
But he has been criticised for failing to better guide Vikram Pandit, a first-time chief executive. Insiders say Citi’s 15-strong board has grown worried at becoming a target for investor anger and regulators’ scrutiny as the group’s fortunes have failed to improve in spite of a $300 billion government bail-out.
Meanwhile, some are wondering whether Pandit himself will be able to hang on. Parsons told The Wall Street Journal today that “there’s no truth” to rumors that Pandit’s job is in jeopardy.
But it can’t be too reassuring to Pandit that the same things were said about his predecessor, Chuck Prince.
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