Citi executives sacked over credit turmoil
Friday, 9 November 2007
David Wighton from New York
Citigroup has sacked two senior executives responsible for its mortgage-backed investments business amid concerns that it could face further heavy writedowns on its holdings of subprime-linked securities.
Michael Raynes, head of structured credit, and Nestor Dominguez, co-head of collateralised debt obligations, both left last week, the company confirmed.
Two weeks ago, Citi said that it had lost $1.6bn on mortgage and loan-backed securities as a result of the credit market turmoil during the third quarter.
But Merrill Lynch's disclosure last week that it had suffered writedowns of $7.9bn on its similar holdings has raised fears that Citi's losses have mounted significantly.
Merrill ousted Stan O'Neal as chairman and chief executive after revealing the losses that it suffered were almost double the figure it had estimated less than three weeks earlier.
Citi was second only to Merrill last year as an underwriter of CDOs, structured investments created from bundles of mortgages.
As demand for the securities dried up over the summer, the banks have been left with large inventories, which have fallen sharply in value.
Citi also suffered $1.4bn of writedowns on leveraged loans and $600m of losses in credit trading in the third quarter. This led to the sacking of Randy Barker, co-head of fixed income.
Mr Raynes reported to Chad Leat, who remains head of credit markets, who in turn reported to Mr Barker. Mr Dominguez reported to Mr Raynes.
The ousting of Mr Barker also prompted the departure of Tom Maheras, the head of all Citi's capital markets operations.
The losses have put further pressure on Chuck Prince, Citi's chairman and chief executive, who had been pressing executives to take more risk.
Mr Raynes was hired from Deutsche Bank in London in the summer of last year on a contract rumoured to guarantee him $10m a year for three years.
"We wish Michael and Nestor well in their future endeavours," Citi said in a statement on Wednesday night.
Under syndication
arrangement with FE
Citigroup has sacked two senior executives responsible for its mortgage-backed investments business amid concerns that it could face further heavy writedowns on its holdings of subprime-linked securities.
Michael Raynes, head of structured credit, and Nestor Dominguez, co-head of collateralised debt obligations, both left last week, the company confirmed.
Two weeks ago, Citi said that it had lost $1.6bn on mortgage and loan-backed securities as a result of the credit market turmoil during the third quarter.
But Merrill Lynch's disclosure last week that it had suffered writedowns of $7.9bn on its similar holdings has raised fears that Citi's losses have mounted significantly.
Merrill ousted Stan O'Neal as chairman and chief executive after revealing the losses that it suffered were almost double the figure it had estimated less than three weeks earlier.
Citi was second only to Merrill last year as an underwriter of CDOs, structured investments created from bundles of mortgages.
As demand for the securities dried up over the summer, the banks have been left with large inventories, which have fallen sharply in value.
Citi also suffered $1.4bn of writedowns on leveraged loans and $600m of losses in credit trading in the third quarter. This led to the sacking of Randy Barker, co-head of fixed income.
Mr Raynes reported to Chad Leat, who remains head of credit markets, who in turn reported to Mr Barker. Mr Dominguez reported to Mr Raynes.
The ousting of Mr Barker also prompted the departure of Tom Maheras, the head of all Citi's capital markets operations.
The losses have put further pressure on Chuck Prince, Citi's chairman and chief executive, who had been pressing executives to take more risk.
Mr Raynes was hired from Deutsche Bank in London in the summer of last year on a contract rumoured to guarantee him $10m a year for three years.
"We wish Michael and Nestor well in their future endeavours," Citi said in a statement on Wednesday night.
Under syndication
arrangement with FE