Citigroup CFO Krawcheck steps aside

Sallie L. Krawcheck, chief financial officer at Citigroup Inc. and one of the most powerful women on Wall Street, was reassigned Monday to head of the company's brokerage and private banking business _ a lower profile job with narrower responsibilities.

The change puts Krawcheck, whose role had included strategic planning, back in charge of the brokerage business she ran two years ago. It also puts her in charge of a division of Citigroup that accounted for only 8 percent of the company's net income in the most recent quarter.

The move had been rumored for weeks as the nation's largest bank struggles to revive its stock price, control its expenses and increase growth in its consumer division. Some investors have called for a breakup of the company or the wholesale replacement of its leadership.

"We believe that if current changes do not result in better performance this year, the CEO's job could be at risk," Michael Mayo, an analyst with Prudential Equity Group LLC, wrote in a report Monday.

Pressure has increased on Charles Prince, the company's chairman and chief executive, said Craig Woker, who follows the company for Morningstar. The change will allow Citigroup "to put in place a CFO that maybe will be able to work a bit better with Chuck Prince and set some strategic goals in terms of getting Citi's growth accelerating."

The move comes after last month's appointment of Robert Druskin as the bank's chief operating officer; Druskin will oversee the global wealth management unit on an interim basis until Krawcheck's replacement as CFO is found.

When Druskin was elevated, Citigroup named two of his deputies to more senior positions, stoking rumors that Krawcheck had been pushed out of contention as a potential replacement for Charles Prince, Citigroup's chairman and chief executive officer.

While Citigroup continues to report strong earnings, its expenses are rising at an even greater pace and some of its peers are outperforming it. And with its stock price lagging, some investors have called for a breakup of the company, or the wholesale replacement of its leadership.

Many analysts saw the shake-up as a positive move for the bank; Citigroup's shares rose 48 cents to $54.98 in afternoon trading on the New York Stock Exchange.

Krawcheck, 42, will replace Todd Thomson, 45, as head of global wealth management. Citigroup said Thomson is leaving the company to pursue other interests.

Krawcheck and Thomson had switched jobs in 2004, in a move Citigroup said at the time was meant to broaden the experience of the up-and-coming executives.

Thomson was thought to have a strong future at Citigroup. Bank of America analyst John McDonald called his departure "the more surprising of the two announcements," and Jeff Harte, an analyst at Sandler O'Neill said that his departure was "not a positive."

Krawcheck joined Citigroup in 2002 as chairman and chief executive officer of its Smith Barney, where her assignment was to separate the research and brokerage businesses. She was there two years before she was named CFO.

As CFO, Krawcheck was in charge of the company's financial reporting, strategic planning, mergers and acquisitions and investor relations. In her new job, Krawcheck will oversee the company's private bank, Smith Barney brokerage unit and its investment research.

"I'm looking forward to returning to an operating role at Citigroup," Krawcheck said. "Great opportunities exist for our global wealth management business, particularly as economic growth drives a continued expansion of wealth around the globe. As we leverage resources across our businesses, we can further enhance our client service and deliver superior growth."

The division has been a strong performer, with earnings up 38 percent in the fourth recent quarter. But it is dwarfed by the company's consumer and investment banking business. Of the company's $5.13 billion fourth-quarter income, only $411 million came from the division Krawcheck will head.

Prince praised Krawcheck for her work enhancing the company's balance sheet management and helping redirect its strategy.

Bank of America's McDonald also defended her tenure, writing, "we do not believe CFO Krawcheck was responsible for Citi's lackluster earnings results over the past two years." Instead, he blamed years of underinvestment in the business, the cyclical nature of some of the company's lines and the shedding of some businesses.

Citigroup is conducting an internal and external search for a new CFO.

The shake-up comes at a time when the chief financial officer position carries more pressure and an ever-increasing workload, thanks to regulatory changes such as Sarbanes-Oxley.

Bank of America CFO Alvaro de Molina left late last year after just 18 months in the post, calling his job "suffocating" and "less fun."

De Molina is being discussed as a possible replacement for Krawcheck. "Citi should do a lot of what it takes _ title, money, etc. _ to get him to consider," Mayo wrote.

In a separate announcement Monday, Citigroup said it would acquire the residential mortgage business of ABN Amro Mortgage Group, including $9 billion in net assets and $224 billion mortgage-servicing portfolio. Terms of the deal were not disclosed.