The chairman of Citigroup Incorporated, Sanford Weill, who may accelerate his departure from the world’s largest financial-services company, should be allowed to go before he becomes a distraction to the current management team led by Chief Executive Officer Charles Prince, investors said.

The 72-year-old Mr. Weill, who agreed to remain chairman until the 2005 annual shareholder meeting, has sought to leave earlier to start his own buyout fund with investors such as Saudi Prince Alwaleed bin Talal, the Wall Street Journal reported yesterday, citing unidentified people familiar with the matter. The board should consider letting him go, investors said.

“There’s plenty more to be worried about at Citigroup than whether Weill stays or goes,” Simon Clinch, who helps manage about $4 billion at London based F &C Asset Management and holds Citigroup shares, said. “If Prince went, that would worry me.”

Mr. Weill transformed Commercial Credit Company, once a consumer lending unit of a computer maker, into Citigroup, now the world’s biggest financial-services company, through a string of acquisitions. He stepped down as CEO two years ago after the firm settled charges that it misled investors with biased research, ceding the job to longtime adviser and general counsel, Charles Prince.

A Citigroup spokeswoman, Shannon Bell, declined to comment.

Mr. Weill didn’t return a call seeking comment. In a one-sentence statement, the company yesterday denied a report by the CNBC TV network that Mr. Weill was leaving.

A spokeswoman for Prince Alwaleed, Heba Fatani, declined to comment. In a February interview, Prince Alwaleed said Mr. Weill appeared to embrace his role as chairman. “He really seems very happy and glad that Chuck Prince took over in a very smooth manner,” Prince Alwaleed said.

The prince, Citigroup’s second biggest investor, owns about 266 million shares, or more than 5% of the company, according to Bloomberg data. Mr. Weill holds 16 million shares.

According to the Journal’s report, Citigroup’s board blocked Mr. Weill’s bid to leave the bank before the April departure stipulated in his contract. Some directors clashed with Mr. Weill over his contract’s noncompete clause, and whether he’d retain his bonus, pension, and perks such as the use of a corporate jet and car, the newspaper reported, citing a person familiar with the matter.

“It sounds to me like he wants to do something on his own that involves the violation of a noncompete clause,” the president of Cavanna Capital Management, Henry Cavanna, who oversees $40 million and owns Citigroup shares, said. “If they don’t hold him to the same standard that they hold everyone else to, that would be contrary to everything else they’re doing. I’m happy to bargain away the noncompete if he’s willing to give up some of the perks.”

Since taking the helm, Mr.Prince, 55, has sold less profitable businesses, eschewed large acquisitions, and spent more than $5 billion to settle many of the lawsuits and regulatory claims that have dented Citigroup’s reputation. Citgroup’s shares, on pace for their second straight annual decline, are little changed since Mr. Prince succeeded Mr. Weill on October 1, 2003.

“What remains to be seen is Prince’s ability to address the operating challenges,” Mr. Cavanna said. “On an operating basis, the performance so far is ho-hum. They’ve got a fabulous franchise. They have to execute and we haven’t seen it yet.”

Citigroup yesterday reported second quarter net income of $5.07 billion. The results failed to meet analyst estimates for the first time in more than three years as revenue from fixed-income trading declined. The company’s stock dropped 3.1%, its biggest decline in 10 months, following the report. The company earned $17 billion last year, down 4.5% from 2004.

Mr. Weill, who started on Wall Street as a $35-a-week runner for Bear Stearns, has stepped back from leading Citigroup since Mr. Prince was named CEO in July 2003.

“Once you thought Weill would be there forever,” said Alison Sinclair, who helps oversee $20 billion at Glasgow based Britannic Asset Management in Glasgow and owns Citigroup shares.

“If he wants to go, he shouldn’t be held back. Prince is the man in charge now.”