Retail banker named at Citigroup

NEW YORK (AP) — Citigroup named a veteran retail banker yesterday to head its North American consumer banking unit, splitting it off from its credit-card business as Citi struggles to become profitable again after suffering its biggest quarterly loss in its 196-year history.

The latest move is the most significant sign yet that CEO Vikram Pandit, appointed in December, wants to fix Citi’s major parts rather than sell them off to raise cash — at least for now.

It also addresses shareholder concerns about what steps Mr. Pandit would take to attract more consumers to Citi’s retail banking unit.

Citi’s worst problems are in its investment banking segment, which made huge losing bets on the mortgage industry. But its bread-and-butter business of lending to and collecting deposits from average people has also been underwhelming shareholders.

Citi is ubiquitous throughout the United States, but in recent years has lost customers to rival banks such as JPMorgan Chase & Co. and Wachovia Corp.

The quality of service at Citigroup branches has “room for improvement,” said Marino Marin, managing director at the boutique investment bank Gruppo, Levey & Co. “They need to regain the trust of the customer.”

Mr. Pandit’s new hire, Teresa Dial, has an impressive resume.

Ms. Dial, 58, spent nearly three decades at Wells Fargo & Co., including serving as president and CEO of its Wells Fargo Bank subsidiary. And since June 2005, she has been leading the turnaround of Lloyds TSB Group PLC’s retail banking in Britain.

Meanwhile, Steven Freiberg — the head of the old global consumer group who will now lead the global credit card business — is bringing to the table about 25 years of credit-card experience at Citi.

And in another change, Mr. Pandit is giving more autonomy to executives in Citi’s various locations around the world, most of which are growing faster than the flagging United States. Ajay Banga has been put in charge of the Asia Pacific region; William Mills is leading Western Europe, the Middle East and Africa; Shirish Apte is head of the Central and Eastern Europe region; and Manuel Mora will continue to oversee Mexico and Latin America.

Overall, the changes point to an effort to decentralize management at the sprawling New York company. And, as Deutsche Bank analyst Mike Mayo wrote in a note, they appear to rule out either a more radical restructuring or the sale of a major business or geographic region.

Nearly four months on the job, Mr. Pandit has reconfigured Citi’s mortgage business, closed some retail branches and made some new key hires in its investment bank and its risk management.

Most industry experts have been cautiously optimistic about Mr. Pandit’s incremental moves.

“He’s not selling Citigroup in pieces, but he’s dividing Citigroup into pieces to measure them better and manage them better,” Mr. Marin said.

Citigroup shares rose 59 cents, or 2.8 percent, to close at $21.42 yesterday.

But in the eyes of many investors, the changes are a bit like “rearranging deck chairs on the Titanic,” said Dan Alpert, managing director of Westwood Capital.

Amid worries about the still-tight credit markets, Citi’s shares recently dropped below $20 — the lowest price since Sandy Weill spearheaded the merger between Travelers Group and Citicorp in 1998 that led to the formation of Citigroup as it is known today.