NEW YORK — Citigroup Inc. said Friday global banking chief Edward "Ned" Kelly will become chief financial officer. He succeeds Gary Crittenden, who will become chairman of Citi Holdings, the entity created for non-core assets.
Kelly, who was Citi's internal investment banker, rose fast at the troubled bank. Crittenden, meanwhile, is moving to the part of Citigroup where the firm is looking to shed non-core assets while focusing on its global investment banking and retail banking operations.
Kelly's role at Citigroup has come into prominence recently. He orchestrated the bank's decision to split its business in core and non-core operations, and to ask preferred shareholders to convert their stake into common stock.
His official title was head of global banking. He started at Citi as head of alternative investments, a role Chief Executive Vikram Pandit once held. Pandit hired Kelly away from private equity firm Carlyle Group, where Kelly was in charge of building a group that would invest in banks.
Asked in a recent interview with Dow Jones Newswires to describe his role at Citi during the 14 months he has been there, Kelly said: "I have known Vikram for a long time, and that's the reason I am here. Anybody at a firm like this, in times like these, should feel challenged and humbled, otherwise he is not being honest."
Crittenden, meanwhile, has long been one of the most vocal defender of Citi's vast product array, its international scope, and its universal banking model. Summing up Citi's string of acquisitions, he has called the bank "the most successful roll up in history." But he also acknowledged in 2007 that Citi needs to shrink to become healthy. He is one of the most respected CFO's on Wall Street, and a man who Citi insiders joke is just incapable of getting angry.
But as the financial crisis went on, it became clear that Citi needed a radical change, though one short of a break up. Kelly led the structural change that split Citigroup in CitiCorp, the core of global wholesale and retail banking, and Citi Holdings. The latter includes the bank's sizable consumer finance operations, like CitiFinancial and CitiMortgage, and Citi's stake in the joint-venture that would combine Citi's and Morgan Stanley's brokerage operations — in other words, the parts that Citi believes it can live without.
Mike Corbat remains the interim CEO of Citi Holdings. Crittenden "is a proven leader with a steady hand and a keen understanding of the complex assets within Citi Holdings," Pandit said in a press release. "I am confident Gary will guide and accelerate our efforts to realize the value of Citi Holdings."
The move to separate CitiCorp from Citi Holdings was intended to clarify Citi's business to investors. But the last strike, for now, against shareholder's concern around capital came when Citi, again under Kelly's leadership, announced just over two weeks ago that it wants to convert $52.5 billion of preferred stock into common shares to bolster its common equity.
Pandit hailed Crittenden's efforts as finance chief, saying he "successfully managed Citi's re-engineering efforts and reduced expenses during a challenging environment. He is a proven leader with a steady hand and a keen understanding of the complex assets within Citi Holdings. I'm confident Gary will guide and accelerate our efforts to realize the value of Citi Holdings for our shareholders."
Crittenden was hired by former chief executive Charles Prince two years ago with a mandate to get Citigroup's costs under control. Before then, he spent several years as American Express Co.'s finance chief.
Kelly joined Citigroup in January 2008. He was one of Pandit's first key hires after assuming the top job in late 2007. He had left JPMorgan Chase & Co. in 2001 to become president and CEO of Mercantile Bankshares, a Baltimore-based bank-holding company Kelly sold two years to PNC Financial Services Group Inc. He then joined Carlyle.
Citigroup shares, which have been on a tear the past two weeks after briefly plummeting below $1, were recently up 4.2% in premarket trading to $2.71 after Thursday's 16% decline.