Some Say Citigroup Should Let Weill Go

Citigroup Inc. Chairman Sanford Weill, who may accelerate his departure from the world’s biggest financial services company, should be allowed to go before he becomes a distraction to current management led by Chief Executive Charles Prince, some investors said Tuesday.

Weill, 72, who had previously agreed to remain chairman until the 2006 annual shareholder meeting, is seeking to leave the New York-based company to start his own buyout fund, said a person familiar with the matter.

CNBC first reported Weill’s change of heart Monday. The Wall Street Journal on Tuesday said his desire to depart had been blocked by some members of the board over issues including a non-compete clause in his contract and Weill’s desire to hold on to some perks.

The board should consider letting him go, some Citigroup investors said.

“There’s plenty more to be worried about at Citigroup than whether Weill stays or goes,” said Simon Clinch, who helps manage about $4 billion at London-based F&C; Asset Management and holds Citigroup shares.

The financial giant on Monday reported second-quarter net income of $5.07 billion, or 97 cents a share, below analysts’ estimates. The company, parent of Citibank, Smith Barney and other units, has been hit this year by weakness in its capital-markets operation and its credit card business.

The company’s shares slid $1.42 on Monday and lost 60 cents Tuesday to $44.40.

Weill transformed Commercial Credit, once a consumer-lending unit of a computer maker, into Citigroup through a string of mergers. He stepped down as CEO two years ago after the firm settled charges that it misled investors with biased brokerage research, ceding the job to longtime advisor Prince.

“What remains to be seen is Prince’s ability to address the operating challenges,” said Henry Cavanna, president of Cavanna Capital Management, a Citigroup shareholder in Stamford, Conn. “They’ve got a fabulous franchise. They have to execute and we haven’t seen it yet.”

Citigroup spokeswoman Shannon Bell declined to comment. Weill didn’t return a call seeking comment.

“Once you thought Weill would be there forever,” said Alison Sinclair, who helps oversee $20 billion at Glasgow, Scotland-based Britannic Asset Management and owns Citigroup shares. “If he wants to go he shouldn’t be held back. Prince is the man in charge now.”