Speculation was mounting last night that Chuck Prince would resign as head of Citigroup tomorrow after it emerged that the board of the world’s largest bank had convened an emergency meeting over the weekend.

The increasing uncertainty over Mr Prince’s future came after another day of pain for global banking stocks, in which Merrill Lynch in the US saw 8 per cent wiped from the value of its shares and Barclays led the FTSE 100 fallers in Britain with a 6 per cent decline.

Meanwhile, in an indicator of the tensions surrounding the financial sector, an analyst, who on Thursday prompted a $369 billion (£177 billion) plunge in the value of US shares by issuing a negative note on Citigroup, said that she had received several death threats from investors in the bank. Meredith Whitney, a CIBC analyst, had prompted a near-7 per cent drop in Citigroup’s shares on Thursday after suggesting that the bank needed to raise more than $30 billion to restore its capital cushion.

Mr Prince, the chairman and chief executive of Citigroup, has faced repeated calls for his resignation in the face of weak profits, a flagging share price and a $6.5 billion third-quarter writedown, which resulted in a 57 per cent decline in profits. He cancelled a key speech in Japan tomorrow only hours before details of the meeting emerged.

So far Mr Prince has refused to step down, opting instead to reshuffle the senior ranks of his operation. Only a few weeks ago he received the public backing of key executives.

However, analysts said that the threat of a further $5 billion of writedowns in the fourth quarter and the resignation this week of Stan O’Neal, the head of Merrill Lynch, after presiding over similar credit crunch-related woes, may have prompted a change in sentiment.

If Mr Prince does resign, Ajay Banga, head of the group’s international consumer business, and Manuel Medina-Mora, who runs its Latin American and Mexican units, are among the favourites to replace him.

Citigroup declined to comment on speculation that Mr Prince would tender his resignation at the meeting on Sunday, which is also expected

to address the need for further writedowns relating to sub-prime mortgage-related investments and buyout loans. Shares in Citigroup closed down 2 per cent at $37.73.

The unrest at the top of Citigroup came as banking stocks continued to slide yesterday. Merrill Lynch took another battering as a leading Wall Street analyst predicted that the bank could take a further $10 billion hit from declines in the value of its sub-prime mortgage investments.

The estimated additional writedown, by Michael Mayo, of Deutsche Bank, dwarfs the previous forecast of $4 billion. Merrill Lynch disclosed last week that it had taken an $8.4 billion charge in the third quarter. Standard & Poor’s, the ratings agency, cut its rating on Merrill Lynch from “buy” to “hold”. The agency also downgraded Wachovia and Citigroup.

Shares in Merrill Lynch closed down almost 8 per cent yesterday, falling $4.91 to $57.28, their biggest drop in six years. Washington Mutual, Goldman Sachs and JPMorgan also finishing the day lower.

In Britain, Barclays was at the centre of renewed concerns about the banking sector. It closed down nearly 6 per cent to end the day at 537.5p on fresh fears that it had sought emergency funding from the Bank of England. The central bank denied that any borrower had tapped its standby funding.

A show of confidence by Frits Seegers, the chief executive of Barclays’ global retail and commercial business, who spent £700,000 acquiring 127,000 shares, was not enough to halt the slide at Britain’s third-largest bank.

The FTSE 100 closed down 55.5 points at 6,530.6 — its second day in the red after a 135.5-point fall on Thursday. The banks shaved 37 points off the index.

Analysts laid into the sector yesterday with a series of downgrades. Sandy Chen, of Panmure Gordon, the stockbroker, said: “There is a clear path that leads from the current turmoil in credit markets to major trading losses for the UK banks with US mortgage and global markets exposure.”

Analysts at Goldman Sachs, the investment bank, gave warning yesterday that UK banks “face a significant number of structural and regulatory issues”. The analysts added to Barclays’ woes by forecasting that second-half profits at Barclays Capital would be £583 million, a 40 per cent fall on the previous year and 65 per cent down on the first half.

Barclays declined to comment, but sources noted that Mr Seegers would not have been permitted to carry out his share purchase if a profit warning had been imminent.

Northern Rock closed flat yesterday at 171.3p a share, despite an interview with Bryan Sanderson, the new chairman, in which he revealed that the troubled mortgage lender could borrow as much as £25 billion in emergency funding from the Bank of England by February.

Market still jittery

–– Shares tumbled on both sides of the Atlantic and the dollar plumbed fresh record lows yesterday as renewed credit market jitters overshadowed upbeat news from the US jobs market

–– Fears that the US economy will succumb to a severe downturn eased as official data showed that American employers hired an extra 166,000 staff last month — twice as many as forecast

–– But the reassurance failed to quell markets’ nervousness as investors focused on confidence-shaking developments at key Wall Street institutions

–– The Dow Jones industrial average, which had suffered a 362-point plunge on Thursday, fell further on the opening bell, before staging a mini rally to close up 27 points

–– The dollar sank to new lows on its trade-weighted index and drove the euro above $1.45. US Treasury bonds gained as investors sought safe havens

Barclays down 34p to 537.5p

Royal Bank of Scotland down 23p to 475.5p

Alliance & Leicester down 21.5p to 730.5p

Lloyds TSB down 13.5p to 517.5p

HBOS down 19p to 825p

HSBC down 19p to 906p

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