The Real Scandal at Citi

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Searching for a CFO

Indeed, Prince appears to have the support of the board, at least for now. "There have been a lot more judgments placed on superficial impressions than on the facts," says Mulcahy. But she also acknowledges "a level of impatience" among investors. Former board member and current Traveler's CEO Jay Fishman says: "To the extent [Prince] can get the organic engine growing, the opportunities are enormous."

With doubts about Prince's stewardship swirling, his choice of a CFO is critical. Citi's third financial chief in three years will have to bring stability to the operation immediately. "Hiring a visible, high-quality CFO who actually has some power to reevaluate if all these pieces belong together" would help, says Marc D. Stern, chief investment officer of Bessemer Trust, which has $46 billion under management.

Says director Mulcahy: "It's a moment of truth for bringing in additional talent." The names in circulation include Alvaro G. de Molina, the former CFO and head of the investment bank at Bank of America Corp. (BAC), and Goldman Sachs Group (GS) partner and Chief Financial Officer David A. Viniar. De Molina didn't return calls seeking comment; Viniar declined to comment.

Lingering Ugliness

Ultimately, Prince will be judged on his ability to create value for shareholders. Thus far he has been unsuccessful. Since January, 2004, Citi's shares have gained just 10%, much less than rival Bank of America's 32% and JPMorgan Chase & Co.'s (JPM) 37%. The comparisons with investment banking giants like Goldman and Morgan Stanley (MS) are less kind: Goldman is up 115%, Morgan Stanley, 40%.

At some point soon the Thomson scandal will die down. The bank will appoint a new CFO. But the current ugliness won't be forgotten.

Der Hovanesian is Banking editor for BusinessWeek in New York .