Subject: [NEXTEL-1] Citigroup-Sends Directors Packing After Nextel Stock Loss & Revenue Decline

From: Marcel <[email-masked]>
Date: Fri, 09 May 2003 01:51:25 -0400

Citigroup Dismisses Equity Co-Chiefs; Forese Named (Update1)

By George Stein

New York, May 8 (Bloomberg) -- Citigroup Inc., the world's biggest financial services
company, dismissed the co-heads of its global equities, Arthur Hyde and Robert DiFazio,
following a 25 percent decline in stock-trading revenue and a loss involving Nextel
Communications Inc. shares.

They were replaced by Jim Forese, 40, an official in its emerging-markets unit, according
to an e-mail to employees from Charles Prince, head of the corporate and investment bank.

The bank may cut 100 jobs, CNBC reported, without citing sources. Calls to Hyde and
DiFazio were referred to Citigroup spokesman Duncan King, who declined to comment.

Citigroup's equity-trading division, which had a first- quarter decline in revenue to $111
million from $148 million, has also lost two senior executives to Bank of America Corp. in
recent months. Ciaran O'Kelly left to become global head of equity trading at Bank of
America in October, joining global head of cash equities, Peter Forlenza, who quit
Citigroup in August.

``Action is warranted,'' said David Hendler, a banking analyst with CreditSights Inc., an
independent research firm. ``If you want to get the most bang for your buck, you start
with the co- heads.''

Trading Loss

Hyde and DiFazio's division recorded a loss in March on a transaction involving Nextel.
The bank offered shares in the mobile-phone company for as little as $13.30 apiece after
buying them from Motorola Inc. for $13.42 each.

Investment banks typically buy shares at a discount to the market price and try to sell
them to investors at a premium of as much as 4 percent.

The bank initially offered the shares at $13.45 a share, and later called money managers
to offer them at the lower price. Bloomberg News wasn't able to determine how many shares
the firm sold.

Schaumburg, Illinois-based Motorola, Nextel's largest shareholder, sold the stock to raise
cash, cutting its stake to 9 percent from 11 percent. Motorola, the world's second-largest
maker of mobile phones, disclosed terms of the sale in a regulatory filing.

Forese, most recently head of arranging locally funded loans to companies in emerging
markets, joined Salomon Brothers in 1985, straight out of Princeton University, becoming
head of the fixed income syndicate desk in 1992. He was named a managing director on Jan.
1, 1993.

Before joining Citigroup's international division, Forese was head of Citigroup's global
interest rate and derivatives unit for two years. From 1995 to 2001, he was head of
European fixed income and global emerging markets based in London.

``Jim's extensive background in trading and risk management disciplines will be a
tremendous asset,'' Prince's e-mail said.

Settlement

Citigroup Chairman Sanford Weill named DiFazio and Hyde among 24 executives selected for a
44-member management committee last February. They'd been head of global equities since
December 1997. Forese will take their place on the committee.

DiFazio joined Smith Barney in 1982 from Paine Webber. Hyde, who also joined the company
in 1982, had been head of a Salomon Brothers investment-grade bond unit before moving to
equities.

The bank's equity operation was roiled by charges from state and federal regulators that
it allocated initial shares sales to win investment-banking business. A ban on the
practice was included in a $400 million settlement Citigroup agreed to pay last month as
part of a $1.4 billion Wall Street pact to reduce conflicts of interest in research.

The Prince memo, which doesn't say DiFazio and Hyde have left Citigroup, names no position
for them at the bank.

http://quote.bloomberg.com/apps/news?pid=10000103&sid=atihi242.42A&refer=news_index