Citigroup is splitting retail, credit card units

NEW YORK - Citigroup Inc. named a veteran retail banker yesterday to head its North American consumer-banking unit, splitting it off from Citi's credit card business. Citi has been struggling to become profitable again after suffering its biggest quarterly loss in its 196-year history.

The latest move is the biggest sign yet that chief executive officer Vikram Pandit wants to fix Citi's major parts rather than sell them to raise cash - at least for now.

It also addresses shareholder concerns over what steps 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.

Pandit's new hire, Teresa Dial, spent nearly three decades at Wells Fargo & Co., including serving as president and CEO of its Wells Fargo Bank subsidiary. And since June 2005, Dial, now 58, has been leading the turnaround of Lloyds TSB Group P.L.C.'s retail banking in Britain.

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.

Pandit also is giving more autonomy to executives in Citi's various locations around the world, most of which are growing faster than the United States.

The changes point to an effort to decentralize management at the sprawling company. And, as Deutsche Bank AG 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.

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

Citigroup shares rose 59 cents, or 2.83 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 L.L.C.

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.

Analysts expect Citi to write down its portfolio of investments, many of which are backed by mortgages, by an additional $10 billion to $20 billion when it reports first-quarter results in two weeks.