| NEW YORK
NEW YORK Citigroup Inc, in a significant management shake-up, named Gary Crittenden to run a unit housing underperforming and toxic assets the bank wants to get rid of, and tapped Edward Kelly to replace him as chief financial officer.
Crittenden on Friday was named chairman of Citi Holdings and will work with its interim chief executive, Michael Corbat, to sell or wind down $850 billion in assets. The unit is separate from Citicorp, whose $1.1 trillion of assets include businesses Citigroup wants to keep, such as retail and investment banking, transaction services, and Citi Private Bank.
The appointments are "the first good news we've had in a long time from Citigroup," said Michael Holland, a money manager at Holland & Co in New York. "Crittenden has earned the confidence of the financial community, and Kelly is considered a very solid, competent citizen. It is a welcome relief."
Crittenden joined Citigroup as CFO in March 2007 after holding the same position at American Express Co, Monsanto Co and Sears Roebuck & Co.
Kelly, known as Ned, was head of global banking, including Citi Private Bank, and joined in February 2008 from private equity firm Carlyle Group. Before that, he was chief executive of Mercantile Bankshares Corp, a Baltimore lender now owned by PNC Financial Services Group Inc.
Citigroup Chief Executive Vikram Pandit is trying to restore the third-largest U.S. bank to health after $37.5 billion in losses over the last five quarters.
The bank has taken $45 billion of taxpayer money to bolster capital, and the government is sharing in losses on $300.8 billion of troubled assets, which are housed in Citi Holdings. The government is expected to soon become Citigroup's largest investor with a possible 36 percent stake.
Citigroup did not return requests for comment.
"They are incredibly important positions," said Anton Schutz, a portfolio manager at Mendon Capital Advisors in Rochester, New York. "Gary can look terrific if he makes assets disappear quickly at good prices, and Ned has an important role in repairing the balance sheet and working with the government, which has become increasingly dangerous for banks."
Pandit split Citigroup in two in January, formally marking the demise of the financial supermarket model that Sanford "Sandy" Weill used to create and build Citigroup in the late 1990s and early this decade.
"Citi Holdings is essentially a marketing operation to get rid of problem assets," said Bert Ely, an independent banking consultant in Alexandria, Virginia. "It falls on Crittenden to get top dollar for the assets they're getting rid of, and that's not easy in this market."
Among the Citi Holdings businesses are the Smith Barney brokerage, which is merging into a joint venture with Morgan Stanley's brokerage; the CitiFinancial and CitiMortgage finance operations; the Primerica insurance unit; and the Nikko Cordial unit in Japan.
While Citigroup treats Citicorp and Citi Holdings as separate operations, both are included in overall results. Pandit last week said Citigroup made money in January and February, surprising analysts.
Ely said Crittenden, who is in his mid-50s, could use Citi Holdings as a springboard. "It positions him for bigger things, whether at Citigroup or somewhere else," he said. "If he does it well, then the headhunters will be banging on his door."
In morning trading, Citigroup shares were up 12 cents at $2.72 on the New York Stock Exchange. They traded above $50 as recently as July 2007.
(Reporting by Jonathan Stempel; editing by Jeffrey Benkoe and John Wallace)