Citigroup Inc announced its biggest management shake-up since the financial crisis began, replacing its chief financial officer and installing a new banking chief as it prepares to give the government a 34 percent equity stake.
The changes, announced on Thursday, come as Chief Executive Vikram Pandit faces intense pressure to improve performance, rebuild the executive ranks in consumer banking, and shed unwanted assets. Citigroup has lost $36 billion over six quarters and received a series of federal government bailouts.
Several analysts called the management changes encouraging, though it is unclear whether they will help Pandit keep his job and what they signify about the role the government will take in running the third-largest U.S. bank.
"They've weathered the maelstrom so far" because of government help, said Malcolm Polley, chief investment officer of Stewart Capital Partners LP. "Uncle Sam is going to put their fingerprints all over this thing."
Edward "Ned" Kelly, who was named Citigroup CFO in March, will become a vice chairman focused on strategy and merger activity.
His replacement is John Gerspach, who has been Citigroup's controller and chief accounting officer. Gerspach is Citigroup's fifth CFO in five years.
Citigroup also hired Eugene McQuade as chief executive of its Citibank unit. He was recently a vice chairman of Merrill Lynch & Co, now part of Bank of America Corp, and is a former chief operating officer of mortgage financier Freddie Mac.
At Citibank, McQuade succeeds Bill Rhodes, a Citigroup senior vice chairman who will reduce his day-to-day responsibilities to focus on international operations, his specialty.
Separately, Gary Crittenden, chairman of Citi Holdings, which includes businesses that Citigroup wants to sell or wind down, will leave the bank and move to Utah to focus on family and business interests. He preceded Kelly as CFO.
"The senior management changes I am making today will further help in positioning our company for the future," Pandit said in a statement.
None of the executives was available for further comment.
In morning trading, Citigroup shares were up 4 cents at $2.66 on the New York Stock Exchange.
Citigroup is expected to report second-quarter results on July 17. Analysts are split as to whether it will post an operating profit or loss.
Soon afterward, Citigroup expects to complete a stock swap that will convert much of the Treasury Department's investment in the bank into a 34 percent stake.
Citigroup has taken $45 billion of federal bailout money and is widely considered the least healthy major U.S. bank.
Michael Mullaney, who helps invest $9 billion at Fiduciary Trust Corp in Boston, said of the management shake-up, "I think it enhances Pandit's ability to survive, especially if McQuade's experience at Freddie Mac results in more political clout."
He added, "McQuade is also a traditional consumer banking executive, which will help Citigroup focus on core businesses and get away from the shopping mall approach Citigroup had."
Jeff Harte, an analyst at Sandler O'Neill & Partners LP in Chicago, called McQuade "a nice fit" and a "well-respected big name" in consumer banking.
He called Kelly's move out of the CFO slot unsurprising, saying, "Ned would be more interested in strategic decisions and (the) overall running of Citigroup, as opposed to being a number-cruncher."
Kelly was chief executive of Maryland's Mercantile Bankshares Corp before becoming Citigroup's CFO.
Pandit became CEO in December 2007. While many people at the bank blame his predecessor, Charles Prince, for many of the bank's problems, Pandit has been criticized for moving too slowly to fix them and for his lack of consumer banking experience.
Christopher Whalen, a managing director at Institutional Risk Analytics in Torrance, California, and a long-time critic of many banking practices, said the management shake-up is good for Citigroup but may not be the last.
"These changes are encouraging," he said. "I am still waiting for them to find someone for the CEO slot who has actually run a bank."