Citi directors consider chairman's replacement; in talks to buy Chevy Chase Bank: WSJ

(RTTNews) - Some directors at the board of Citigroup Inc. (C), dissatisfied by the financial giant's performance, are considering replacing Sir Win Bischoff as chairman, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The report also said the company is in talks to buy Maryland-based Chevy Chase Bank.

It is not clear how many of directors of the company are asking for the change of the chairman, and it is also possible that the board will opt to stick with its current chairman.

"I'm not sure it will happen, but it seems likely" that Sir Win will be replaced, the report quoted one person familiar with the situation.

Meanwhile, a Citigroup spokeswoman reportedly said, "Any report that the board is searching for a new chairman is false."

One leading candidate for the post is Richard Parsons, Time Warner Inc.'s (TWX | Quote | Chart | News | PowerRating) chairman and a member of Citigroup's board. He also is part of President-elect Barack Obama's transition economic-advisory board, and there are chances that he may be asked to take a prominent role in the new cabinet.

The possible replacement of Bischoff comes as the company's board is adopting an increasingly assertive stance towards overseeing Chief Executive Officer Vikram Pandit and his tightknit team of executives, who took over last December from Charles Prince, who stepped down amid huge losses.

Parsons, Citigroup's lead outside director, recently has been involved often in monitoring the company's internal operations, and has been summoning top executives to gauge their opinions on the operations, even hearing complaints from some.

Citigroup recently had posted its fourth straight quarterly loss, with total losses of more than $20 billion, reflecting billions of dollars in write-downs and credit losses, impacted by housing and credit market woes. Citigroup has slashed its dividend twice, fired thousands of employees and raised more than $60 billion in capital, including $25 billion through a recent infusion from the U.S. government. Impacted by all these, Citigroup's stock price fell below $10 a share on Wednesday, the first time it crossed that threshold in 12 years, on a split-adjusted basis.

Meanwhile, Citigroup Tuesday unveiled a series of initiatives, including a Homeowner Assistance program and the extension of its foreclosure moratorium practice, to help potential at-risk borrowers who are current on their payments and ultimately in their homes. The company said the steps are part of its loss mitigation efforts that have been in place over the past two years.

Citigroup directors recently retained New York law firm Cravath, Swaine & Moore to advise the board.

The report also said that Citigroup is in talks to buy Chevy Chase Bank, which operates in the mid-Atlantic region. Citigroup is one of a number of bidders for Chevy Chase.

Bethesda, Maryland-based Chevy Chase has more than 280 branches, mostly in the metropolitan Washington area, and has $14.9 billion in assets and about $11.4 billion in deposits. The bank earned $55.3 million in 2007.

Citigroup last month had lost the fight for Wachovia Corp. (WB | Quote | Chart | News | PowerRating) to Wells Fargo & Co. (WFC | Quote | Chart | News | PowerRating), which came with a higher offer. Citigroup is reportedly seeking billions of dollars in damages over the breakup of its deal. The loss of Wachovia triggered troubles inside Citigroup, with some executives blaming Pandit and his team.

C shares fell $1.16 or 10.74% on Wednesday to close at $9.64, on a volume of 161 million shares. In the past 52 weeks, shares have been trading in a broad range of $9.52 - $37.50.

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