Citi shakeup coming as U.S. tightens grip
Citigroup will soon announce replacements on its board of directors as the struggling banking giant's shares continue to sink. The New York-based firm must now also deal with its new largest shareholder, the U.S. government.
(IBTimes) -- 02/27/2009 --

Citigroup will soon announce replacements on its board of directors as the struggling banking giant's shares continue to sink. The New York-based firm must now also deal with its new largest shareholder, the U.S. government.

Citigroup's chairman Richard Parsons said today that the bank is in the process of replacing the company's board of directors. Meanwhile, its chief executive Vikram Pandit said the company's operations would not be affected after the U.S. moved to take up to a 36 percent stake in the bank.

Parsons followed up on a January 16 announcement indicating that the company had determined to "reconstitute the board … as quickly as possible." The Board has unanimously decided to have a majority of new independent directors "as soon as feasible," he said.

"We are actively conducting a search and expect to announce several new directors shortly," Parsons said in a statement.

Shares of Citigroup plunged 41.5 percent today, or $1.02 to $1.44 in late afternoon trading on the New York Stock Exchange. The stock was above $50 through much of 2007 until the current financial crisis wiped out most of its value.

The U.S. today exerted its rights to convert preferred shares it bough last October for $25 billion. Citi said the government would convert that stock in amounts equal to the amount of preferred stock of private and public holders and trust preferred securities exchanged.

Citi said it would offer to exchange common stock for up to $27.5 billion of its existing preferred securities and trust preferred securities at a conversion price of $3.25 a share.

Preferred stock the U.S. acquired worth $20 billion issued on Dec. 31 last year and Series G stock worth $7 billion would convert into separate trust preferred securities with a coupon of 8 percent, Citigroup said.

Pandit said in a released statement the securities exchange "has one goal – to increase our tangible common equity."

He said the exchange "does not change Citi's strategy, operations or governance."

The transaction could increase the bank's Total Common Equity from the fourth quarter level of $29.7 billion to as much as $81 billion, the bank said.

The company, citing "the rapid deterioration in the financial markets, as well as in the global economic outlook generally," also announced it has recorded a pre-tax goodwill impairment charge of approximately $9.6 billion in the fourth quarter of 2008. It also said it recorded a $374 million pre-tax charge to reflect further impairment evident in the intangible asset related to Nikko Asset Management as of Dec 31, 2008.

About International Business Times

The International Business Times is composed of twelve high-growth online editions (ibtimes.com) that give readers local reports balanced with multinational perspectives. Exclusive and transparent insights from global markets make The International Business Times an indispensable news source for business-minded individuals.

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here