Citigroup plans to overhaul its board as part of a capital-boosting deal with the U.S. government, but the banking giant may struggle to find qualified people willing to join as directors.

In the corporate world, board members often find themselves targets of lawsuits when things do not go well. Turning around the ailing Citigroup is an enormous task with little upside.

Citigroup's directors will have to deal with the additional burden of regulators looking ever more closely over their shoulders and possibly second-guessing their decisions.

If anything goes wrong with a company, then almost inevitably nowadays the directors are going to be sued, said Donald Glascoff, chairman of the board of New York-based Park Avenue Bank.

If you combine the general concern that people have who are considering board membership with the specific and increasingly important concern that arises from regulatory actions, you end up with a difficult situation.

The government agreed on Friday to boost its equity stake in Citigroup to as much as 36 percent, bolstering the bank's capital base. The latest rescue gives the government more of a voting stake and far greater influence over the bank's operations, short of outright nationalization.

The bank plans to shake up its board and install a majority of new, independent directors. Five of the board's 15 members are either not standing for re-election or will reach retirement age by Citigroup's annual meeting in April.

Citigroup is actively conducting a search and expects to announce several new directors shortly, Chairman Richard Parsons said in a statement.

Two people the bank approached to take up a seat on the board rejected the offer, according to The Wall Street Journal.

Citigroup was not immediately available for comment.


Traditionally, the post of corporate board member was perceived by some as an easy paycheck for not much work.

But it has become tougher over the years, with the job requiring more time and oversight, as tougher regulations were put in place after scandals like Enron and WorldCom, said Morton Pierce, chairman of Dewey & LeBoeuf's mergers and acquisitions group.

Whether it's in the financial sector or otherwise, being an outside director is a very difficult job nowadays, Pierce said. It's just generally more difficult to find qualified, independent directors.

The problems at Citigroup, which suffered a full-year loss of $27.7 billion, can only make the job harder. The bank once had a market value about $270 billion. At its low on Friday, the value was below $9 billion.

Still, some experts believe the ailing giant can find people willing to take on the challenge, with their reward being the satisfaction derived from helping turn around the bank.

It will be difficult but not impossible for them to find additional directors, Glascoff said.

Some Citi directors have already signaled their intent to leave amid criticism of the bank, as executives have struggled to right the ship and repeatedly sought the government's help.

Parsons, the former Time Warner Inc chief executive, took over as chairman on January 21, succeeding Sir Win Bischoff, who is expected to retire.

The last 15 months have not been the easiest of my 44 years in banking, Bischoff said in a memo to employees at the time. He said he had always envisioned a limited tenure.

Bischoff's departure came just days after Robert Rubin, a former U.S. Treasury Secretary, resigned as a senior counselor to the bank, following months of criticism of his performance. Rubin joined Citigroup in 1999. He, too, is expected to quit the board in April.

In a letter to Chief Executive Vikram Pandit at the time, Rubin praised Citigroup management for making the tough decisions to restore the bank to health, but admitted to having not foreseen the credit crisis and market deterioration.

My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today, Rubin wrote.