Citigroup bosses face axe in Obama’s deal

Clear out: Citigroup will sack directors in return for converting preferred stock into shares

Bill Condie11 April 2012

Citigroup will be forced to raise private capital and sack some directors in return for converting preferred stock into shares, insiders say.

The Obama administration will demand the changes in an effort to strengthen the bank but does not plan to put any additional money into it for now. A deal could be announced today.

Washington pumped $45 billion (£31.39 billion) into Citi last year.

The bank's stock price sank below $2 last week for the first time in 18 years.

Federal Reserve Chairman Ben Bernanke said this week he wanted to avoid nationalising Citigroup but that the government might end up owning a "substantial minority" of the bank.

Insiders have predicted that Washington could end up with up to 40% of the bank.

Chief executive Vikram Pandit is selling businesses to raise capital after the bank posted a record $18.7 billion loss in 2008.