NEW YORK — In a surprise reshuffling of top management, Citigroup Inc. lured one of the nation's most respected bankers to run its depository business and moved its chief financial officer into a job heading strategy and Citi's own dealmaking.
Eugene McQuade, the new chief executive of Citibank, has a lot of experience in banking — and with managing institutions in financial trouble. He was chief operating officer of Freddie Mac, head of banking at Merrill Lynch & Co. and president of Bank of America Corp. He was a highly regarded chief financial officer at FleetBoston Financial, when that bank sold itself to Bank of America in 2004.
As CEO of Citibank, he will run the unit at the heart of Citi's effort to change from a financial-services conglomerate to a bank. Citibank is Citi's main banking unit, holding deposits from consumers and businesses as well as other Citi units. Deposits are key for Citigroup: The company was hobbled as the financial crisis unfolded because it didn't have enough deposits, and it had too much financial leverage from the securities business. The imbalance left regulators deeply worried about Citi's ability to survive.
Citi also said that Edward "Ned" Kelly, who took over the CFO position from Gary Crittenden in April, will return to his previous position as head of strategy and Citi's advisor on its own mergers, acquisition and divestitures. Kelly will be promoted to Vice Chairman of Citigroup.
Citigroup didn't explain the abrupt move.
Citigroup also promoted its comptroller and chief accounting officer, John Gerspach, a Citi veteran of 19 years, to succeed Kelly as CFO.
Kelly joined Citigroup in January 2008, initially as head of the company's alternative-investments business. He was one of CEO Vikram Pandit's first key hires after assuming the top job in late 2007 and Kelly has seen his role expand since then. Kelly is a key ally of Pandit, and Citi's main negotiator with the government over the company's rescue.
Bill Rhodes, the chairman and president of Citibank, will "reduce his level of operating responsibility in order to focus more of his time on Citi's international franchise," Citigroup said in a release. He will remain a Senior Vice Chairman of Citigroup and Citibank.
McQuade will add weight to Citi's efforts to reinvent itself as a more traditional banking businesses. Citibank, one of the banking industry's most recognized brands, was often an afterthought to Citi's massive investment banking and consumer-finance businesses. But with Citi's restructuring, Citibank has become central to the bank's overall strategy. Executives have made clear that attention will shift to the retail banking strategy, particularly in the U.S.
In January, Citi separated its operations in Citi Holdings and Citicorp. Citi Holdings contains the consumer finance brands that don't generate deposits, like CitiFinancial, Primerica and CitiMortgage, and "toxic" loans and securities.
Citicorp holds what Citi considers its "core" retail and commercial banking business and the investment bank, which is being restructured away from risky derivatives and proprietary trading to a more client-focused strategy. McQuade will be in charge of the legal entity Citibank, which is holding deposits for both the retail and the commercial and investment banking businesses, rather than the banks retail branches.
Citi executives have made clear that they intend to revitalize the retail banking business. But Citi insisted that McQuade's appointment doesn't change the position of Terri Dial, who joined last year as head of Citi's consumer banking and global head of consumer strategy. She remains responsible for the branch business, including anything from retail banking products and marketing to branch design. Citi executives have made clear that they intend to revitalize its retail banking business.
McQuade, like Dial, will report to Pandit.
McQuade left Freddie in September 2007 after passing on the chief executive job; he left Bank of America twice, shortly after the Fleet and the Merrill deals were sealed. Given his stature and his experience, he was widely expected to eventually land a CEO position with a major bank.
Pandit said in Citi's release, "Our relentless focus on executing against our strategic priorities at Citi continues ... We are making consistent and substantial progress towards these goals. The senior management changes I am making today will further help in positioning our company for the future."