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Parsons to become chairman at Citigroup

January 22, 2009|Associated Press

NEW YORK — Citigroup Inc. is replacing its chairman with longtime board member Richard Parsons, marking a larger-scale overhaul of a board many investors blame for the bank's problems.

Parsons, the former chief executive of Time Warner Inc., succeeds Win Bischoff, who became chairman in 2007 after Citigroup let go of its beleaguered CEO and chairman at the time, Charles Prince. The move is effective Feb. 23, Citigroup said Wednesday.

Bischoff, who has been at Citigroup since 2000, is not putting himself up for reelection at the board's annual meeting this spring and will retire this year, the bank said.

Longtime board member Robert Rubin, a former U.S. Treasury secretary, said this month that he too would be retiring from Citigroup.

With Parsons saying he expects other board members to retire as well, analysts are now wondering how far the rebuilding of Citi's board will go -- and whether changes could also occur within the company's executive management.

CEO Vikram Pandit has had a little over a year to turn around the troubled banking behemoth. Board members, including Parsons, have continually voiced their support for him, but investors are getting restless; Citigroup's stock fell to a 17-year low Tuesday.

"The big question," said banking industry consultant Bert Ely, "is what happens to Pandit?"

"Parsons is a solid guy, but Pandit is the CEO," said Ely, who is based in Alexandria, Va. "The real leadership has to come from Pandit. . . . You get the impression that there's still a lot of foot-dragging going on with really coming to grips with Citi's problems and its far-flung, scattered, nonintegrated nature."

The ailing bank has suffered five straight quarters of losses and received $45 billion in government aid as it struggles to stay afloat amid the credit crisis. Last week, the company said it would reorganize into two units -- in effect breaking up the "supermarket" model it has been trying to make work over the last decade -- as it reported a fourth-quarter loss of $8.29 billion.

Citigroup shares rose 87 cents, or 31%, to $3.67 before the announcement was made. The shares were flat in after-hours trading.

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