Citigroup's Prince to Officially Resign Sunday

Well, Monday ought to be an interesting day for Citigroup (C) shareholders.

Just yesterday I said the emergency meeting of the Board of Directors Sunday was going to mean "more write-down and the end of the reign of Prince." It looks like that will come to fruition.

Prince suffered mainly from being "the guy who followed the guy" who was very dynamic and made shareholders very wealthy. You never want to be the follower. You always want to be "the guy who follows the guy who followed the guy". Expectation are so low now any improvement at all will be met with immense enthusiasm where the same improvement with Prince would have been looked at with an "its about time" scorn. Fair or not, it is just the way it is.

Folks expect Prince to be an extension of Sandy Weill and when he wasn't, he was doomed. We have to give Prince some credit though. The Citigroup he inherited was in legal and regulatory trouble and he did calm the waters and clear the decks of these issues. That being said, his job now is done. What Citi needs is a far more dynamic leader and one with a Wall St. pedigree.

Who?
Vikram S. Pandit, who was elevated to head Citigroup’s investment bank and alternative investments group in early October? No. Not enough experience heading an institution as large and diverse as Citigroup.

Robert Druskin, the chief operating officer and the former head of Citigroup’s investment bank? No. The last thing Citi needs now is another internal appointment and his friendship with Prince will hurt his chances.

Board member Robert Rubin, who has been one of Mr. Prince’s advisers and advocates? No, but he should be forced to take over in the interim as he need to do something to justify the $100 million he has made with Citi. His reputation has been blighted by his seemingly blind support for Prince despite Citi's obvious problems and he needs to take action to rectify it. Should Rubin not elect to take over in the interim, he ought to be asked to leave as one has to then seriously wonder what he has done to justify any monies he has received.

Who then?

Two names, Hank Paulson or John Thain, both former Presidents at Goldman Sachs (GS). The hiring of either of these two would focus shareholders and the market on the future and "what can be" rather than having both entities spending their time looking on the rear view mirror longing for the "good ole' days".

Thain, who is the current President of the NYSE may not be able to resist getting back into the game and playing with Citi's operations. Paulson recognizes he only has a year left at his current post in Washington and would command a pretty penny to run Citi, a penny shareholders would gladly pay at this point. Now, with the Merrill Lynch (MER) job open also, the competition for a Chief will be intense assuming both firms will be looking to the outside for a replacement (they really ought to be). When you add Bear Sterns (BSC) possibly looking for a replacement for James Cayne, things may heat big time very quickly. That being said, one cannot underestimate the importance of this hire form Citi as it will frame expectations for the company through the current decade.

Citi is a massive operation with immense value at current prices for the right CEO who can make its diverse part work cohesively together. The new CEO is going to get a grace period and Citi can then use that to announce any additional write-downs should they then be necessary.

All this will have to take place before the next earning filing with the SEC though as whomever is in charge will have to certify the filing and any write-downs will then have to be done.

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