Chuck Prince, CEO of Citigroup (NYSE: C), needs a few friends. Not the kind he can go fishing with.
Prince's job may be on the line now that Citi has announced that its Q3 profits will drop 60% from last year. According to MarketWatch, the bank blamed "dislocations in the mortgage-backed-securities and credit markets, and deterioration in the consumer-credit environment."
Prince finds himself in a position not unlike that of James Cayne, the head of Bear Stearns (NYSE: BSC). Both financial institutions now have taken very big hits on their watches. Both can blame subordinates, but that may not cut it with their boards or public shareholders.
What saves them? For starters, UBS (NYSE: UBS). The Swiss bank has just reported similar problems in its fixed income portfolio. If the bad news spreads to Bank of America (NYSE: BAC), Lehman (NYSE: LEH) and other global money center banks and investment firms, Prince may be viewed as a victim of a train wreck that almost none of the large firms could avoid. He will, in essence, look as stupid as all of his peers.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-01-2007 @ 10:43AM
Pat Kelley said...
Financial stocks are best bought after they get hit !
GM closing more plants will stall there sales in US!Bean counters arent always right ! Projections and waste of time meeting . Fire all top level in maunfacturing Plants use lower tear managers . 1 presend to communicate with Plant superintendents
Thats all cut the Fat !
10-01-2007 @ 4:41PM
Seth said...
While someone needs to take responsibility for these losses (and Mr. Prince should be that person), I still think that the rest of Board at Citigroup possess a wealth of management talent. NewsVisual created an interesting interactive map of the Board ties of Citigroup http://www.newsvisual.com/newsvisual/2007/10/management-expe.html . After viewing these ties we see that they have mangement experience not just in financial services, but also in engineering, food industry, entertainment, etc. With all this management experience I think Citigroup will bounce back fairly quickly.