Citigroup top executives leave over Japan scandal

Three top Citigroup Inc executives, including Vice Chairman Deryck Maughan, are leaving the financial services giant in the wake of a scandal at its Japanese private banking unit.

The resignations come after Citigroup Chief Executive Charles "Chuck" Prince, a lawyer who rose to the top job last year, promised to rid the company of regulatory problems and improve its reputation.

Maughan, a British-born banker who also heads Citigroup's international operations, will leave the company along with Thomas Jones and Peter Scaturro, Prince said in a memo on Tuesday. Jones was the chief of Citigroup's investment management arm while Scaturro was the head of its private bank.

The memo did not name any replacements but said the asset management and private banking operations will report to Chief Operating Officer Bob Willumstad.

The departures come as the world's largest financial services company attempts to recover from a string of regulatory problems.

The incidents triggered analyst downgrades and helped push Citigroup shares to near one-year lows.

Japan last month ordered Citigroup to close its Japanese private banking business after uncovering manipulative lending practices and failure to screen out suspected money laundering.

Just days earlier, Tokyo regulators had faulted Citigroup for misleading clients in a series of private bond sales. And the company's European operation had been forced to apologise for a huge government-debt trade that roiled markets.

Initially, six lower-ranking Citigroup officials left the company over the Japan penalty, one of the harshest ever levied by the country against a foreign bank.

On a conference call for quarterly results last week, Prince said examples like the Japan episode "are simply not acceptable, and we're taking very strong action," with "more to come."

An independent person hired by Citigroup to review the matter concluded that Maughan, Jones and Scaturro shared responsibility, a source familiar with the situation said.

The independent reviewer was Eugene Ludwig, a former comptroller of the currency, according to newspaper reports.

Maughan, who was knighted in 2002 for his contributions to British business interests in America, had been chief executive of bond trading powerhouse Salomon Brothers before its absorption by Citigroup in 1997. He rose to Salomon Brothers' top job after a Treasury-bond rigging scandal rocked the bank.

Jones, head of Citigroup Global Investment Management, had been chairman and CEO of Salomon Smith Barney Asset Management.

Scaturro has been chief executive of Citigroup Private Bank, responsible for about 129 offices in 36 countries. Todd Thomson, the group's current chief financial officer. will oversee the private bank effective November 5, the memo said.