Citigroup chief quits over sub-prime woes - Monday 5th November 2007

Citigroup has become the latest and biggest victim left reeling from the US credit crunch, with the group's under-fire chief executive resigning amid bad debt revelations.

Robert Rubin, current head of the bank's executive committee, will step in to take the place of departing Charles Prince, who could no longer stay as mortgage-related debt write-offs emerged to the tune of $8-11 billion.

Blaming the worsening sub-prime securities market since the end of September, Citigroup's woes reflected a worrying over-exposure of the banking world to bad debt, with the new losses coming on top of the $5.9 billion write-down reported in early October.

Mr Prince said in a statement: "Given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down."

Despite Citigroup's status as the world's biggest bank, the huge sub-prime related losses could cancel out fourth quarter earnings, making the task for former US Treasury secretary Mr Rubin an even tougher one.

While sub-prime debt write-downs have damaged many financial institutions, gold investment has benefited from its safe-haven status, with the value of the precious metal now consolidating above the $800 mark.
Goldbug, 05 Nov '07

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