U.S. activist investors are seeking to oust board members at beleaguered banks whom they blame for helping cause the companies' financial woes, setting the stage for drama at upcoming annual shareholder meetings.

With their stock prices decimated over the past year and investors seething over massive government bailouts, Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) and Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) are both targets of high-profile shareholder campaigns opposing the re-election of several directors.

At Bank of America, activists want to strip Chief Executive Kenneth Lewis of his title as chairman, which would be a sharp rebuke of his leadership by the bank's shareholders.

A number of big shareholders have called for Lewis to step down since the bank announced in January it took a $20 billion government bailout to help secure the buyout of troubled Merrill Lynch & Co, a deal that critics say Lewis engineered too hastily.

Activists say they want the ouster of directors whom they think failed miserably in overseeing risks as well as other duties.

The votes will be announced after scheduled annual meetings at Citigroup on April 21, and Bank of America on April 29.

Activists may try to target board members at other troubled companies as annual meeting season gets into full swing. Most public corporations hold them in April or May.

The American Federation of State, County and Municipal Employees (AFSCME), a union group seeking to rid the Citigroup board of six directors seeking re-election, is expected to announce a corporate governance campaign aimed at another unspecified financial company as soon as Wednesday.

Citi is the first one we have focused on this year, said Richard Ferlauto, AFSCME's director of corporate governance and pension investment. There will be one other.

The so-called vote no campaigns intended to oust board members have become more frequent as additional big companies change voting rules under shareholder pressure, leading to more contentious director elections.

Efforts to unseat directors at annual meetings can be a powerful tactic to express shareholder anger. Even if not successful, they embarrass company leaders, attract media attention and ultimately can bring about board-room change.

Last year, Washington Mutual Inc took away then-CEO Kerry Killinger's title of chairman after shareholders voted to ask the board to appoint an independent director to the job. A holding company for the thrift, which was hard hit by the mortgage crisis, later filed for bankruptcy protection.

BofA's LEWIS UNDER ATTACK

One group of directors sure to be under investor scrutiny this year is the board of American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), the bailed-out insurer facing public anger over $165 million in bonuses to top executives.

The company, like other financial firms that got government aid, will be required to hold an advisory shareholder vote on compensation practices. The company in the past has held its annual meeting in May.

For now, some prominent union-backed pension plan groups are focusing on Bank of America and Citigroup.

At Bank of America, activists are pushing to remove CEO Lewis from his job as chairman, saying he was reckless in agreeing to buy Merrill, which lost almost $16 billion in the last quarter of 2008. The board, critics say, did not adequately monitor what Lewis was doing.

The board needs to be restructured, reduced in size and strengthened, said Michael Garland, director of value strategies at the Change to Win (CtW) Investment Group, an adviser to union retirement plans.

The union group also is urging Bank of America shareholders to oppose the re-election of lead director O. Temple Sloan and director Thomas Ryan, chairman of the governance committee.

A long-time Bank of America investor, Jerry Finger, has launched a separate campaign to remove Lewis as chairman and oppose the re-election of Sloan and board member Jackie Ward, chairwoman of the board's asset quality committee.

A Bank of America spokesman declined to comment.

At Citigroup, which has received $45 billion in capital from the U.S. government, the AFSCME union group wants investors to reject the re-election of six directors who are or have been members of the audit and risk management committee.

It is time for long-time culpable directors to leave the board to allow a fresh start for Citi, AFSCME contends.

Citigroup says its board had diligently carried out its duties and there is no basis for any recommendations against directors who have served on our audit committee.

Still, in mid-March Citigroup said it was nominating four new independent directors, part of a shake-up seen as increasing the financial expertise on the board.

Several directors are stepping down, including former Chairman Sir Win Bischoff and former senior counselor and former U.S. Treasury Secretary Robert Rubin.

Some angry investors might prefer to see the dismissal of entire boards and start over with clean slates. Activists, though, say their strategy is to try to surgically remove directors they consider most responsible for the problems.

You can't remove the whole board in the middle of a financial crisis, said CtW's Garland. But you have to start someplace.

(Reporting by Martha Graybow; editing by Jeffrey Benkoe)

Citigroup Bank of america