Citigroup shakes up top management

By Jonathan Stempel

NEW YORK (Reuters) - Citigroup announced on Thursday 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 revolving door that Citigroup's upper management has become spun again amid intense pressure on Chief Executive Vikram Pandit to improve performance, add consumer banking experience in the senior ranks, and shed toxic or unwanted assets at the third-largest U.S. bank.

"It has been a long time coming," said Christopher Whalen, a managing director at Institutional Risk Analytics in Torrance, California, referring to the management shuffle. "The government controls the bank."

Edward "Ned" Kelly, who became CFO in March and is a former CEO of Maryland's Mercantile Bankshares Corp, was promoted to vice chairman focused on strategy and merger activity.

The new CFO is John Gerspach, the bank's controller and chief accounting officer. Gerspach is the bank's fifth CFO in five years. Both he and Kelly are 56.

Eugene McQuade, 60, was named chief executive of the Citibank unit. He was previously vice chairman of Merrill Lynch & Co, chief operating officer of mortgage financier Freddie Mac and president of Bank of America Corp.

McQuade succeeds William Rhodes, a senior vice chairman who will reduce his day-to-day responsibilities to focus on international operations, his specialty. Citigroup is based in New York but operates in more than 100 countries.

Separately, Gary Crittenden, who became chairman of the Citi Holdings unit created to hold businesses that Citigroup wants to sell or wind down, is leaving the bank and moving to Utah to become a managing director at private equity firm Huntsman Gay Global Capital. Crittenden preceded Kelly as CFO.

None of the executives was available for comment.

UNCLE SAM'S FINGERPRINTS

Several analysts called the management changes encouraging, though it is unclear what they signify about Pandit's job status and the government's role in running the bank.

Top government officials did not order the shake-up, though the U.S. Federal Deposit Insurance Corp did learn about the changes Wednesday night, a person familiar with the matter said.

Citigroup is still subject to a government-ordered independent management review, the person said, suggesting that more executive changes could be forthcoming. The person lacked authority to speak publicly.

Citigroup has lost $36 billion over six quarters and received a series of federal bailouts. The bank has taken $45 billion of federal bailout money and is widely considered the least healthy major U.S. lender.

"They've weathered the maelstrom so far" because of the 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."