Maughan forced out of Citigroup over Japan bank fiasco

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The Independent Online

Sir Deryck Maughan, chairman of Citigroup's international business, has become the highest-profile casualty of an internal purge by its chief executive, Chuck Prince, after the forced closure of its Japanese private bank last month.

Sir Deryck, who was one of the best-known faces of Citigroup globally, was chairman of its Japanese business until two years ago. The son of a coal miner, Sir Deryck had previously worked at the Treasury and Goldman Sachs. He joined Salomon Brothers in 1983 and was its chief executive when it was acquired by the US insurer Travelers in 1997, which wasthen rolled into Citigroup.

While the market had expected Mr Prince to take decisive action after the Japanese regulators ordered Citigroup to shut down its private banking business due to regulatory failure, the seniority of the employees being removed underlines how seriously Citigroup is taking the situation.

Thomas Jones, head of investment management, and Peter Scaturro, head of Citigroup's private banking, were also to be forced out this week.

Citigroup declined to comment on the personnel changes. In a memo to staff on Tuesday, Mr Prince said all three "have been members of our senior management team for many years and we wish them well in the future". Mr Prince has suffered a series of setbacks to his strategy of clamping down on controversial practices within the group.

In addition to the Japanese ruling, Citigroup was also forced to apologise for a massive European bond trade that displeased UK regulators because it aggressively took advantage of thin summer trading. Mr Prince, who has just marked the one-year anniversary in the top job at the world's largest financial services group, called the trade "completely knuckle headed" and promised to take decisive action against those responsible in the bank.

It is unlikely Mr Prince will take such severe action against his bond trading department as he did with the international business because they did not actually break regulatory rules.