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Thread: Citigroup suffers a huge loss and world stock markets trembles

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[quote=MARRIE,266274]She said that the impact on the bank's European business was difficult to quantify, adding: "There is no doubt that if you look at our numbers . . . results were not as strong as we would have hoped."

Citi's chief executive officer, Charles O. Prince, forced three executives to leave the company after the Japanese scandal and reportedly has been taking disciplinary action against traders involved in the European dealings, according to published reports.

Prince, who is a lawyer, has made "accountability" a theme for the bank since he took over the top operational job at the company from Sanford I. Weill in October 2003. Weill remains chairman.

The changes announced Friday would appear to make many of Citigroup's subsidiaries more directly accountable to top management.

The reorganization, which is subject to regulatory review, is expected to be completed in the third quarter.

Also Friday, Citigroup announced it was making "limited staff reductions" in its corporate and investment banking division.

An estimated 1,000 jobs are expected to be cut worldwide, according to people familiar with the decision. The division currently has about 48,000 workers. Citigroup employs some 285,000 people worldwide.

The main reorganization announced Friday involves merging Citi's two bank holding companies -- entities that operate Citi's banking and credit card operations -- into the mother company, Citigroup Inc.

The holding companies-- Citicorp and Citigroup Holdings -- are legacies of the merger of Citicorp and Travelers Life in 1998 that created Citigroup. Citi announced late last month that it was selling Travelers to MetLife Inc.

In a second step, Citi said it was creating Citigroup Funding Inc. The subsidiary will issue commercial paper and medium-term notes, the banking company said. Other capital markets funding activities, including issuance of long-term debt, will be handled by Citigroup Inc.

In a third move, Citi is tying its Citigroup Markets Holdings Inc. subsidiary, also known by the acronym CGMHI, closer to the mother company.

The Global Capital Markets Group, which is the division involved in the European trading problems, is part of CGMHI.

Under the restructuring, Citigroup will guarantee the public indebtedness of CGMHI.

"Upon issuance of the guarantee, CGMHI will no longer file periodic reports with the Securities and Exchange Commission and will continue to be rated on the basis of a guarantee of its financial obligations from Citigroup," the statement said.

Citi had more than $1.4 trillion in assets as of the end of 2004 and serves some 200 million customers in more than 100 countries.

Citigroup shares rose 42 cents to close at $49.40 in Friday trading on the New York Stock Exchange.

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