Sunday, November 4, 2007

Citigroup To Write Down $6 - $10 Billion


Citigroup faces a write-down in the range of $6 billion to $10 billion, mainly because of exposure to subprime mortgages and collateralized debt obligations, CNBC has learned.

Citigroup will be parting ways with CEO Charles Prince, according to sources.

Citi Chief Executive Officer Charles Prince has already offered to resign from his post, according to a person familiar with the situation, and the financial services company's board is expected to accept his resignation at an emergency meeting scheduled for Sunday.

The size of Citi's write-off is still being debated, though a source told CNBC that Citi's board is pressing company finance executives to clarify the issue. The firm's audit committee is also scheduled to meet Sunday, in advance of the emergency board meeting.

This should not surprise anyone. Financial firms are writing off tons of debt right now. Citigroup is one of the largest financial firms in the country and they are involved in just about everything.

Prince will be Citi's sacrificial lamb. Considering the breadth of the street's exposure to these items, blaming Prince is a pretty stupid idea. I'm sure everyone thought he was a genius when he thought Citi should invest in CDOs etc...

The article goes on to note that some analysts are forecasting broad writedowns across the industry, with Merrill, Bank of America, Wachovia and Morgan Stanley specifically named.