Citigroup smarting as Prince leaves

NEW YORK -- Charles Prince is walking out Citigroup's doors with potentially millions in his pocket, leaving behind a bank many believe needs serious therapy.

Investors are not only worried about the $8 billion to $11 billion the bank expects to slash on its investments. They're also concerned Prince's successor as CEO may not administer the bitter medicine many say the bank needs to revive, including lancing some of its businesses.

Citigroup Inc. shares plunged $1.83, or 4.9 percent, to $35.90 Monday.

Many market watchers have said Citigroup's stock would soar once Prince was out. But shareholders' displeasure was not with Prince the person but rather his unproven strategy and hesitancy to break up the nation's biggest financial services company, built by his predecessor Sanford I. Weill.

Chairman Robert E. Rubin and acting CEO Sir Win Bischoff have indicated that they plan to continue with Prince's strategy, keeping Citigroup intact and focusing particularly on international operations.

"Investors were seeking more value from Citigroup, value that they haven't been given under Chuck Prince's leadership," said Kris Niswander, senior industry analyst at SNL Financial LC. "The consensus was, a change in leadership would help extract value. Whether that is realized will be anyone's guess."

Of course, everything depends on the next CEO. Industry watchers have pointed to several potential replacements for Prince, including Rubin, Citigroup Chief Financial Officer Gary Crittenden, NYSE Euronext CEO John Thain, BlackRock CEO Laurence Fink, and Dick Parsons. Parsons, a member of Citigroup's board and CEO search committee, said Monday he is stepping down as CEO of Time Warner Inc. at the end of the year.

The person the search committee chooses and nabs will have quite a cleanup on his hands and some noisy, antsy shareholders to satisfy.

"Investors are going to be demanding results quickly, and that's going to be difficult to achieve," Niswander said.