Citibank in the Financial Crisis September 18, 2008 Source: Duowei Forum/TabId/2101/Default.aspx It was another embarrassing day for Citibank. On July 18, the second quarter financial report of 2008 announced that Citibank had a net loss of 22

One hundred million U.S. dollars.

Meredith Whetley, a female analyst who became famous after successfully warning that Citigroup would significantly cut its dividend, did not make a profit forecast for Citigroup as she did last quarter, but such a result was not unexpected.

Since the subprime crisis began, Citigroup took a write-down of US$18.1 billion in the fourth quarter of 2007, resulting in the highest quarterly net loss of US$9.8 billion in its nearly 200-year history.

Then in the first quarter of 2008, it took a write-down of 12 billion and recorded a net loss of 5 billion US dollars.

The write-down of US$3.4 billion in the second quarter was relatively small. However, at the end of 2007, Citigroup had US$55 billion in subprime mortgage bonds, so Citigroup should still have more than US$20 billion hanging over its head.

In addition, in view of the complex economic trends - oil, credit, employment, housing market, inflation, etc., Wall Street analysts declared that Citigroup's bad debts in personal loans and credit cards will gradually emerge, and it can be expected that in the second half of 2008 and 2009

The road will still be full of thorns.

In the past six months, Citigroup's daily trading volume has ranked first on Wall Street. Its stock price has been falling from US$57 per share in December 2006 to only around US$16 in early July 2008.

Charles Prince's CEO career came to an abrupt end. This bank, founded in 1812, should be the flagship of American finance.

Its financial products cover many fields, from consumer finance to corporate finance, from credit card business to investment business, almost everything.

It has 380,000 employees in more than 100 countries around the world.

Citibank can be said to be the foreign bank that Chinese people are most familiar with.

As the first foreign bank in history to open up the Chinese market, it was listed in Shanghai in 1902. After withdrawing from the mainland in the late 1940s due to political factors, it returned to China in 1984 as the first foreign bank.

Thanks to its diversified geographical distribution and product configuration, Citigroup's profit record has always been the best among its peers.

Just over a year ago, in the second quarter of 2007, then-CEO Charles Prince proudly announced the best quarterly net profit in history - $6.2 billion.

This corporate lawyer who has worked for Citigroup for more than 20 years has been a loyal deputy and legal advisor to the former Jewish boss CEO Sanford Weill for many years. He won Weill's appreciation during many merger battles.

Since Prince was recommended as CEO by Will in October 2003, this can be said to be the most glorious moment in Prince's CEO career.

The tall lawyer has an incomparable eloquence. His speech is like the final statement in court, clear, bright and persuasive.

Unfortunately, the good times did not last long. The subprime mortgage crisis began to emerge in the second half of 2007. The market value of the subprime mortgage bonds on Citigroup's books quickly evaporated. Doubts about Prince's ability to run the company came from all directions, and Citigroup's stock price began to take a dive.

The board of directors made a decisive decision to abandon Prince Paul and Citigroup to protect the stock price.

On Friday, November 2, 2007, there was news on Wall Street that Citigroup's board of directors would hold an emergency meeting on Sunday.

Sure enough, Prince issued a statement the next Monday morning, taking responsibility for the failure and resigning out of guilt.

Although the golden parachute (dismissal compensation) given to him by Citigroup should be more than 100 million US dollars, it is any CEO's nightmare to be eliminated so quietly.

Wall Street's assessment of Prince's merits and demerits is fairly fair. After Citigroup's rapid expansion and mergers in the past decade, the behavior of some traders and departments was close to walking a tightrope.

Citigroup has been subject to huge fines in Europe, the United States, and Japan. The Bank of America Regulatory Commission did not even allow Citigroup to make any mergers before correcting its mistakes.

After taking office, Prince used his natural advantage as a counselor to quickly remedy the situation and standardize the control mechanism.

It is said that in Japan he bowed in standard Japanese style to apologize.

However, as some analysts have said, he is experienced and wise, but Citigroup is too big and complex, and he lacks the all-round spirituality to control Citigroup.

Will was a little worried when he handed down the CEO position. He took two checks and balances. He became chairman and promoted veteran Robert Willumstad to COO.

But after a while, like all CEOs, Prince began to make his own decisions without relying on Will. Later, the dissatisfied COO Willustai also left Citigroup in 2005.

What is even more shocking is that Citigroup did not appoint a COO for the next year and a half.

Apparently the board accommodated Prince, thinking it would allow him to better coordinate decision-making.

You can imagine how tiring it would be to run such a big stall without a COO.

Later, financial expenses reached an uncontrollable level, and Citigroup investors and Wall Street raised their concerns.

Only then did Prince appoint his long-time friend Robert Druskin as COO.

However, it was too late. The subprime mortgage crisis dealt Prince a fatal blow.