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Regulators press Citigroup to replace its chairman

Federal banking regulators are pressing Citigroup to shake up its board and replace its chairman,Winfried F W Bischoff,in an effort to restore confidence...

Written by New York Times | New York | Published: January 13, 2009 1:34:56 am

Federal banking regulators are pressing Citigroup to shake up its board and replace its chairman,Winfried F W Bischoff,in an effort to restore confidence in the beleaguered financial giant. Richard D Parsons,the chairman of Time Warner and a Citigroup director,has emerged as the leading candidate to succeed Bischoff as Citigroup’s chairman,people briefed on the situation said on Sunday night. While the timing was uncertain,the change could come as early as this week.

Regulators are growing increasingly concerned that Citigroup’s board is struggling to regain investors’ trust after the company was compelled to seek not one but two financial lifelines from Washington.

The issue gained new urgency on Friday when Citigroup,under pressure from regulators,took a step toward breaking itself apart with a plan to spin off Smith Barney into a joint venture with Morgan Stanley. That news coincided with an announcement that Robert E Rubin,the former Treasury secretary and an influential Citigroup director,would resign.

Given the turmoil at Citigroup,many analysts and even some Citigroup insiders wonder whether the company’s chief executive,Vikram S Pandit,can hold on to his job. While Citigroup insists that Pandit has the full backing of the board,some members have privately expressed some frustration with his leadership. Pandit lost a crucial ally with the departure of Rubin,who championed his selection as chief executive.

But the bank’s regulators expressed measured confidence that Pandit and his team could succeed,according to people briefed on the situation,and Pandit’s position appears secure for now.

And Parsons,in an interview Sunday,said Citigroup’s board was behind the chief.

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