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CAPITAL MARKETS

What Citigroup needs to do next

Citigroup's vision of the ultimate financial company, manufacturing and selling every financial product, is lost. A series of scandals betrayed the fact that the structure Sanford Weill built had reached the limits of its manageability. Charles Prince now has a new plan to put the bank back on track. Will it work?

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STANDING ON THE stage at Carnegie Hall, Sandy Weill has heard just about enough. From the floor at Citigroup's shareholder meeting, the tall, elderly man has been complaining in a loud,  German accent that it was the shareholders who paid all Citigroup's huge financial penalties in 2004; top executives just went on paying themselves handsome bonuses. Weill, who took home a mere $10 million last year compared with the $30 million he pocketed in 2003, eases back slightly on his heels, compressing his lips and pushing his jaw forward. "In 17 years, from 1986 to 2003, our stock price grew better than an average 20% a year compounded," he lectures. He keeps his temper in check but his previously jovial tone has given way to something harsher. His face set, Weill sums up in brook-no-argument manner: "So I think management did a pretty good job for shareholders through many markets."

If this is meant to crush the questioner, to put him in his place like a junior employee who has displeased the big boss, it fails utterly.