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Subprime mortgage crisis claims second victim

Citigroup Charles Prince plans to resign in face of fresh losses from distressed mortgage assets leading to a $5 bn write-down.

business Updated: Nov 03, 2007 15:08 IST

Turmoil in subprime mortgages and credit markets has possibly claimed its second victim.

Chairman and Chief Executive of financial giant Citigroup Charles Prince plans to resign at a board meeting on Sunday in face of fresh losses from distressed mortgage assets leading to a $5 billion write-down and sharp drop in profits, media reports said on Saturday.

The move would end the four-year tenure of Prince, a longtime lawyer and loyal lieutenant of former Citigroup head Sanford Weill, who assembled the financial giant that stands as America's largest bank by assets, the Wall Street Journal reported.

It would make Prince the second major chief executive in finance to leave his job in a week, following the ouster of Merrill Lynch's Stan O'Neal.

At Sunday's meeting, the New York Times said directors are also expected to formally accept his resignation and discuss the possibility of another write-off, just weeks after announcing large losses related to subprime mortgages and the credit market turmoil.

Prince moved before the board considered his fate. Noting that his tenure has been rocky, the Journal said he faced pressure to cut costs, and more recently, debt-market turmoil has taken a tremendous toll.

Citigroup's stock is down 31 per cent this year and almost 9 per cent in the last week. People familiar with the matter were quoted as saying that the Securities and Exchange Commission (SEC) is looking into the bank's accounting for its off-balance sheet investment funds that have recently attracted scrutiny.

First Published: Nov 03, 2007 15:05 IST