Mortgage Continued: Alwaweed on Prince

I know we are running a little late on current events, but life has been a bit busy. Anyway, it is always interesting when Alwaleed gets annoyed. He waits, waits, waits and then look out. From Fortune.

Prince Alwaleed: Let me tell you the facts. Basically when Citigroup pre-announced the $6.4 billion writeoff, Chuck Prince called me within five minutes of the announcement and informed me of that loss and I told him bluntly and openly, "Is this the end of the story? Did you think of everything?"

His answer was "yes" and he expected normalization in the fourth quarter. I listened to the analyst discussion he had with everybody else and he said there would be normalization in the fourth quarter. So obviously, this gave me comfort that this was a onetime event and only an aberration and I backed off.

Although the writeoff said $6.4 billion, post-tax $3.4 billion, if you compare this to the equity of Citibank and the profits of Citibank in the third quarter, there was a $2.4 billion profit. So it was a hiccup assuming that this was a onetime event. But what happened two or three weeks later, another $8 to $11 billion additional write-off, the situation changed completely.

You cannot come to the public and say that this normalization is expected in the fourth quarter and then three weeks later, not three months later, you come and say there is an $11 billion writeoff. This is unacceptable. That's when the events changed completely. My backing was withdrawn dramatically. You should never commit to something that you can't deliver. Never.


Q: Are you disappointed in Chuck Prince?

A: I am extremely disappointed with Chuck Prince and I believe that Chuck Prince let down the shareholders completely. Citibank did not conduct itself in the right way. The risk-management situation was very wrong at Citibank.


Q: Was Chuck Prince not going resign without [pressure]?

A: The impression I had is that he was not going to resign at all.

Q: Did Chuck Prince ever offer his resignation to you?

A: No, he did not.

Q: Did you like Chuck Prince?

A: Yes, Chuck Prince was a good man. Honest man. Decent man.

Posted on November 26, 2007 and filed under Finance.