Robert Rubin yesterday said he would leave Citigroup after a controversial decade on its board as it emerged that the company was in talks to cede control of its Smith Barney brokerage unit to Morgan Stanley in return for about $2.5bn in cash.

The two dramatic developments mark the end of an era for Citi, which has been rocked by more than $50bn in mortgagerelated losses during the financial crisis, and could herald a radical reshaping of the US financial services industry.