Citigroup in race for Chevy Chase Bank; management shake-up possible
13 Nov 2008
Citigroup Inc is in talks to buy US regional lender Chevy Chase Bank FSB, which operates in the mid-Atlantic region, the Wall Street Journal said. Only a few days ago, the paper had reported Citigroup's interest in an unnamed regional bank. (See: Rebuffed by Wachovia, Citigroup looks to acquire regional bank)
Citigroup is among a number of bidders for Chevy Chase, and it isn't clear the New York-based bank will walk away with a deal, the paper said. Chevy Chase Bank, based in Bethesda, Maryland, has more than 285 branches, mostly in the Washington metropolitan area. As of 30 June, it had $14.9 billion of assets and $11.4 billion in deposits.
Last month, Citigroup lost out in its bid for Wachovia Corp, which was acquired by Wells Fargo & Co. Citi had almost sealed a deal to acquire Wachovia's assets and the incident had left Citi management red-faced. (See: Citi fumes as Wells Fargo steals Wachovia)
In another development, a number of directors reportedly dissatisfied with the performance of the financial giant, are considering to replace Sir Win Bischoff as chairman. The board wants closer oversight of the efforts of chief executive Vikram Pandit and his team, the Wall Street Journal reported.
A leading candidate to take over as Citigroup's chairman is Richard Parsons, Time Warner Inc.'s chairman and the Citigroup board's lead outside director, sources say. Parsons has run a savings bank and is one of the few Citigroup directors with financial services experience, the Journal reported.
Meanwhile, Parsons has extended his support to CEO Pandit even as the company's stock fell below $10 for the first time since 1996.
''I have got great confidence in him,'' said Parsons in a Bloomberg Television interview yesterday, referring to Pandit who replaced Charles Prince as CEO last December amid record mortgage-related losses. ''He came in under the most extreme circumstances. He inherited the biggest bank in the world that's got exposure in virtually every country and every asset, so any time anything goes down, Citi has to deal with it.'' (See: Vikram Pandit appointed Citi CEO; Sir Win Bischoff chairman)
Citigroup has already lost 67 per cent of market value this year. The New York- based company reported net losses of more than $10 billion in the first nine months of 2008 and analysts estimate the fourth-biggest US bank by market capitalisation will post a $187 million deficit in the fourth quarter.