Braddock mystery threatens Citicorp's dollars 650m stock offer: The resignation of its president has cast a shadow over the US's biggest bank, Larry Black reports

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DOUBTS HAVE increased on Wall Street about a dollars 650m (pounds 390m) offering of preferred stock next week by Citicorp, following the sudden and still unexplained resignation late on Monday of its president, Richard Braddock, a long-time confidant of the chief executive, John Reed.

The share price of America's largest bank holding company has been slipping steadily since the offering was first announced in August, dropping from about dollars 22 to dollars 15.50 early yesterday. But Mr Braddock's unexpected departure on the eve of Citicorp's New York 'road show' for the sale caused the share price to tumble another 10 per cent at the opening of trading yesterday, creating a temporary order imbalance as potential investors and their advisers scrambled for information.

Early reports speculated that Mr Braddock, 50, had been forced out, either because of an earlier reorganisation that diluted his authority or because he was being blamed for lending problems that would reduce the bank's third-quarter earnings. After announcing his departure, Citicorp issued a pre-tax earnings estimate of dollars 80m-dollars 100m for the quarter, or about 10 cents a share, well below consensus estimates of 27 cents.

Another theory suggested that Mr Braddock had been sacrificed to appease US bank regulators, who issued a formal reprimand to Citicorp's mortgage bankers earlier this year.

Citicorp's strangely worded press release said that Mr Braddock 'chose to resign after concluding that his best contribution to the recovery of Citicorp's momentum has been realised'.

But banking specialists said none of the explanations held water. 'If he has completed his work in turning around the bank, and that reorganisation is as successful as they say it is, then you'd think they would give him the medal of honour instead of showing him the way out,' said Rafael Soifer, analyst with Brown Brothers Harriman in New York.

The alternative rumours do not explain the suddenness of Mr Braddock's resignation nor the fact that it took effect immediately. Mr Braddock, assumed by many to have been Mr Reed's most likely successor, had been president for two and a half years, and both the management changes and the regulatory censure have been in place for months.

It is also unclear whether the third-quarter results - which include an unexpected dollars 65m restructuring charge and do not include expected one-off gains from asset sales - will be all that disappointing after all. In any event, noted Sharon Haas, analyst with Thomson Bank Watch in New York, Mr Braddock did not oversee the division responsible for the write-off of dollars 870m worth of consumer debt.

'If anyone is being pushed (out) to satisfy regulators or shareholders, it would be Reed, not Braddock,' Mr Soifer said, alluding to persistent rumours that the chairman will eventually be forced to leave the bank.

Mr Braddock is the third senior Citicorp executive to leave under similar circumstances. Larry Small, head of Citicorp's institutional bank, resigned unexpectedly two years ago. More recently, the vice-chairman, Michael Callen, another Reed loyalist, quit the bank, giving a less-than-satisfactory explanation, analysts said.