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02 March 2024

Citi faces union group pressure

By Agencies


A union pension fund adviser is threatening to take action against Citigroup board members if they do not disclose what action they took to fend off the bank's recent multibillion-dollar credit losses, according to a letter the group sent on Monday.


CtW Investment Group said Citigroup's "failure to manage mortgage-related risk" cost shareholders $126 billion when Citigroup's stock fell last year.


The group said it may work to oppose the re-election of Citigroup's Audit and Risk Management Committee at its 2008 shareholders meeting, including board members C. Michael Armstrong, George David, John Deutch, Andrew Liveris and Anne Mulcahy.


"Accountability for risk management begins with the Audit Committee, and they will be the first to face an opposition shareholder vote," said CtW in a statement. "Even as the risk of a mortgage meltdown became clear, Citigroup increased its mortgage-related exposure."


Citigroup has been hard hit by its exposure to a wave of sub-prime mortgage defaults starting in mid-last year. The bank reported a fourth quarter net loss on Tuesday of $9.83bn, or $1.99 per share, largely due to credit losses. It said revenue declined 70 per cent to $7.2bn and called the results "clearly unacceptable."


Citigroup responded with an emailed statement that said: "The Citi Audit Committee has diligently carried out its responsibilities, including with respect to issues surrounding mortgage related exposures. There is no basis for an election challenge."


Citigroup shares closed down seven per cent at $26.94 on the New York Stock Exchange. (Reuters)