Scandal stocks •  •  •  •  •  •

NEW YORK (MONEY Magazine) - Since Chuck Prince took over as CEO from Sandy Weill a little over a year ago, Citigroup has suffered one embarrassment after another.

In May, Citi was fined as much as $70 million by the Federal Reserve for alleged abuses in its consumer-finance division, such as improperly requiring cosigners on some loans and overcharging some subprime borrowers. The company also suspended two executives in China for allegedly lying to regulators.

But Citigroup's greatest fiasco last year occurred in Japan, where the company's private-banking division was shut down by regulators over violations that included misleading sales practices and weak safeguards against money laundering.

Prince is making all the right noises now. He's fired three senior execs and even bowed in apology during a Tokyo press conference. If he can stop this steady drip, drip, drip of bad news, the market may forget all these messes quickly. None were big enough to have a material impact on the earnings of a company as large as Citigroup.

And Citi has some big trends in its favor, such as a pickup in Wall Street mergers and acquisitions that should be a boon to its investment banking business.

Since Citigroup has lagged the shares of other big banks, it now trades at a P/E of 11. At that price, the stock's 12 percent projected earnings growth and 3 percent-plus yield look attractive.

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