Citigroup CFO Krawcheck To Move to Global Wealth Unit
Citigroup Chief Financial Officer Sallie Krawcheck, one of Wall Street's most powerful women, is returning to her old job as head of its wealth management division.
Krawcheck, 42, replaces Todd Thomson, 45, who is leaving to pursue other interests, Citigroup said on Monday. Robert Druskin, who became chief operating officer last month, will run the wealth management unit until the largest U.S. bank finds a new CFO.
The move returns Krawcheck, Citigroup's highest ranking woman and considered a potential future Wall Street chief executive, to a job she had swapped in 2004 for Thomson's job.
Analysts said Krawcheck's latest assignment is not a promotion, and some said they view it as a demotion. Several also said Krawcheck's skills are better suited to running wealth management than the CFO job.
"It's not a promotion if you think of it only as whether this puts her in line for CEO succession," said Henry Asher, president of Northstar Group Inc. "It's probably good for the company to put her in a unit that suits her talents."
Krawcheck had been chief executive of Sanford C. Bernstein & Co. before joining Citigroup in 2002.
Citigroup has struggled to manage interest-rate changes, like many banks, and has had difficulty keeping costs down. Wealth management comprises the Smith Barney brokerage,
private bank and research unit. It is Citigroup's third-largest unit, after retail banking and corporate and investment banking.
"Citigroup had billed the swap as a promotion for Krawcheck and Thomson, and now bills the switch back as a promotion for Krawcheck -- it's like Lake Wobegon, where everyone's moving
up," said Craig Woker, an analyst at Morningstar Inc.
"Putting her back in wealth management lets her succeed in a job she had proven successful in," he continued. "The real question becomes whether she still has anything to prove, and
whether she sticks around."
Before becoming CFO, Krawcheck was widely credited with restoring the luster of Smith Barney, which was tarnished in the Wall Street scandal over biased stock research.
Many on Wall Street had speculated in the last two months that Krawcheck was unhappy with the CFO job and might resign.
"I'm looking forward to returning to an operating role at Citigroup," she said in a statement.
Chief Executive Charles Prince said Krawcheck did a "terrific job" as CFO, and called expanding wealth management "one of our most important strategic priorities."
Neither Prince nor Krawcheck was immediately available for further comment.
"I don't think she (Krawcheck) would countenance something she saw as a demotion," said Michael Holland, a money manager at Holland & Co. "People have talked about the Smith Barney unit being spun off. They might start talking about it again."
Last quarter, the wealth management unit earned $411 million on revenue of $2.72 billion, a respective 8% and 11% of Citigroup's totals. Smith Barney accounts for roughly three-quarters of the unit's results.
Krawcheck's pay totaled $10.1 million in 2005, ranking her among Citigroup's top five executives, according to the bank's proxy filing last March. Thomson was not among the top five.
Another top woman executive at Citigroup, Marjorie Magner, stepped down as retail banking chief in 2005 amid concerns over the bank's direction.
On Monday, Magner said she launched a private equity firm with Robert Willumstad, who was Druskin's predecessor as COO.
"Many women may watch this (Krawcheck's move) closely to see if this is a signal about women in management, or just a signal about this one," said Benson Rosen, a professor at the
University of North Carolina's business school, who has studied women in management.
Citigroup is the third of the four largest U.S. banks to replace its CFO in the last year, joining Bank of America and Wachovia .
Separately, Citigroup announced on Monday that that it will buy ABN AMRO Mortgage Group, an originator and servicer of U.S. prime residential mortgage loans.
Citigroup will purchase about $9 billion in net assets and ABN AMRO's approximately $224 billion mortgage-servicing portfolio. The acquisition will add about 1.5 million servicing customers to CitiMortgage Inc.'s portfolio and 2,500 wholesale brokers to its wholesale lending business.
The deal is expected to close in the first quarter.