Citigroup Inc, the largest US bank, has created an new unit to manage its subprime mortgage assets after reporting massive writedowns over the weekend, and named a proven crisis- manager, Richard Stuckey, as its head.
Citigroup's chief executive Charles Prince resigned over the weekend as the bank announced that it will see revenues decline 8 billion to 11 billion dollars on losses related to subprime mortgages. The crisis will cost the company up to 7 billion dollars in net income in the fourth quarter.
Sir Win Bischoff was named interim chief executive. Stuckey, 51, will manage the Sub-Prime Portfolio Group, overseeing assets related to loans to homeowners with poor credit history, the New York-based bank said. Defaults in subprime mortgages sparked a credit crisis this summer across the banking industry.
Nine years ago, Stuckey helped rescue hedge fund giant Long-Term Capital Management from a bankruptcy that could have sparked a major downturn in world financial markets. Citigroup's own shares fell nearly 5 per cent Monday and led to a tumbling of financial stocks in Europe and elsewhere.
Prince's resignation was the second at a major financial firm after Stan O'Neal, chief executive of US investment banking giant Merrill Lynch & Co, stepped down last week under pressure from the board. The firm had 2.3 billion dollars in losses in the third quarter after the company had to write off 7.9 billion dollars in the wake of the mortgage and credit sector crisis.
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