Citi Tackles Multi-Billion Dollar MBS Hit

Reeling from a multi-billion dollar decline in U.S. subprime mortgage-related exposures that forced its chief executive to step down, the New York-based Citigroup Inc. has made plans to start a new unit to focus on the problem and repositioned its leadership. The new unit will be solely focused on Citi's approximately $55 billion in subprime mortgage-backed securities and related exposures and be run separately from the other mortgage-related capital markets and banking units, according to a statement issued by Sir Win Bischoff, chairman of Citi Europe and Citi's new acting CEO. Mr. Bischoff and executive committee chairman Robert Rubin, Citi's new chairman of the board, are replacing departing chairman and chief executive officer Charles Prince. Mr. Prince resigned Sunday, citing the large scope of MBS-related losses that are expected to cut Citi's revenue roughly $8 billion-$11 billion and reduce net income approximately $5 billion-$7 billion on an after-tax basis. Citigroup can be found on the Web at http://www.citigroup.com.