Changes at the Top for Citigroup, CEO Prince steps down

Citigroup (C) Chairman and CEO Charles Prince has resigned. A move that shareholders were seemingly asking for, for more than a year, finally happened, and all it took was a disastrous housing and credit situations that nearly crippled the momentum of the United States economy.

Citigroup stock was recently beaten down heavily as the company was downgraded by analysts who were citing more write-downs due to mortgage loses and the fear that the company may need to cut its dividend in order to conserve its cash reserves. Citigroup had written down $6.5Billion worth of mortgage based investment losses. That's plenty of money to just vanish, but the kicker is that it's seemingly not gonna get better any time soon. The announcement of Prince stepping down was followed by further words of mortgage losses totalling up to $11Billion.

The company tried to reassure investors by claiming that it has no plans to cut its dividend but it'll be wait and see if that in fact is reality. Citi stock peaked earlier this summer and has fallen over 30% from that high. In the midst of these hefty losses and write-downs it was time for a change. The Chairman spot will be taken by Robert Rubin and the CEO title will be held in the interim by Sir Win Bischoff. What's next for the now struggling bank and its stock? Does anyone really know? A company having to make changes at the executive level is usually a company dealing with some kind of turmoil. However, a bank as big as Citigroup, with a reach across 100 countries has to be expected to recover in the coming years.

Holders have taken the hit now, but if the dividend in fact stays where it is, than the powerful yield of over 5% is very attractive at these stock levels. I thought Citigroup would find its floor around the $35 level but we'll have to see how traders react to Prince departure. Had this happened in the months before the credit crisis the response would have been overwhelmingly positive but with the heavy losses lingering on the minds of shareholders I expect he response to be more muted. Citigroup has a ways to go to get back near its highs, and while there are much better banks out there, with less exposure to credit problems, its a company that is so widely held that at levels under $40 it should be owned.

Disclosure: Author is long C