At Citigroup, a Shake-Up in Ma

Published: March 21, 2009

Citigroup announced another senior management shake-up Friday, raising fresh concerns about the company’s leadership just as Vikram S. Pandit appeared to have made progress stabilizing the bank.

Gary L. Crittenden, Citigroup’s chief financial officer, will move into a part-time consulting role as chairman of Citi Holdings, overseeing a division the bank created to hold toxic assets and other businesses it plans to sell. Edward Kelly, a trusted lieutenant who has been handling Citigroup’s negotiations with the government, will take over as the finance chief.

The change gives Citigroup its third chief financial officer in three years, and some analysts said the shift suggested the depth of Citi’s management team had thinned. “It has been some time since an individual with a long history at Citigroup was selected for a top position,” said Richard X. Bove, a banking analyst, in a report on Friday. “This company has destroyed its ‘farm’ team seeking ‘big hitters’ from outside. It is the New York Yankees of banking.”

Mr. Crittenden, a former American Express finance chief, is viewed as one of the bank’s best managers and a credible successor to Mr. Pandit if he stepped down. He was brought in as its finance chief in March 2007 to improve relations with investors and help turn around the bank. But as Citigroup’s troubles worsened, he has spent much of his time cleaning up a series of financial problems at the bank. Besides leading its expense reduction effort, Mr. Crittenden played a crucial role developing the bank’s government bailout and revamping plans. He has also had the unenviable task of delivering five consecutive quarters of multibillion-dollar losses.

Mr. Crittenden requested a job with more flexibility earlier this year after a health issue in his family led him to want to spend more time at home, according to people who have been briefed on the situation. The board signed off on the switch after meeting earlier this week.

As chairman of Citi Holdings, Mr. Crittenden will provide strategic advice on the vehicle he helped develop to streamline the company. Citi Holdings has more than 100,000 employees and plans to sell about one-third of its assets over the next few years. These include its private-label credit card and consumer finance businesses, and tens of billions of dollars worth of illiquid mortgage-related assets. Michael Corbat, who had been the interim chief executive, will be in charge of running the daily operations of the “bad bank.”

Mr. Kelly, a veteran deal lawyer and banker, has become one of Mr. Pandit’s most trusted advisers and one of his few confidantes. Since taking over Citigroup’s alternative investment unit last February, he has had a meteoric rise.

Mr. Kelly has been Citigroup’s top negotiator with government officials on all three weekend rescue efforts. He was also at Mr. Pandit’s side as they bid for the Wachovia Corporation, which Wells Fargo ultimately snatched from Citigroup’s clutches. But despite a long career in financial services — including stints at JPMorgan, the Carlyle Group and the helm of a small Middle Atlantic regional bank — he has never been a finance chief.

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