Nov. 13 (Bloomberg) -- Citigroup Inc., the largest U.S. bank, will combine debt and equity underwriting into one division and merge its stock and bond sales units, in the wake of a management shakeup last month.

The combined underwriting group will be led by Tyler Dickson, 40, while the new sales group will be co-led by Antonio Cacorino and James O'Donnell, 46, according to an internal Citigroup memo today that was confirmed by spokesman Stephen Cohen. Both groups will report to James Forese, 44, who was promoted to oversee the New York-based bank's trading businesses following Thomas Maheras's departure on Oct. 11.

Citigroup follows Morgan Stanley, Goldman Sachs Group Inc. and other Wall Street banks in combining debt and equity operations. The firms say the move helps streamline customer service by reducing the number of salespeople calling on corporate treasurers and institutional investors.

``We have decided to adopt a model that will more closely align our origination and sales functions,'' Forese said in the memo. ``By doing so, we will be better positioned to provide clients with the highest-quality advice, the most innovative solutions and the best execution.''

Vikram Pandit, promoted in last month's shakeup to oversee Citigroup's trading, investment-banking and alternative-investing departments, was a co-president of Morgan Stanley's institutional division in July 2002 when that firm combined debt and equity underwriting operations. New York-based Morgan Stanley is the second-biggest securities firm by market value.

Forced Out

Pandit, 50, who quit Morgan Stanley in 2005 and later started Old Lane Partners LP, joined Citigroup this year when the bank bought the hedge fund for $800 million.

Former Citgroup Chief Executive Officer Chuck Prince, 57, who was the architect of the Oct. 11 shakeup that led to the departure of Maheras, 44, was himself forced out last week when the bank announced $8 billion to $11 billion of fourth-quarter writedowns on mortgage investments.

Citigroup gained $2.33, or 6.9 percent, to $35.90 at 4:17 p.m. in New York Stock Exchange composite trading. The shares are down 36 percent this year.

According to today's memo, Paco Ybarra, 45, will oversee the fixed-income trading department, which includes corporate bonds, interest rates, commodities and foreign exchange.

Prior to last month's shakeup, he was one of three co-heads of the fixed-income business. The others were Randy Barker, 48, who was asked to leave, and Geoff Coley, 47, who was reassigned, Prince said in an Oct. 11 interview.

Reassigned

Dickson, who oversaw equity underwriting, was promoted over his counterparts in debt underwriting, Chad Leat and Mark Watson, who are being reassigned. Leat, 51, will assume a senior role focusing on clients, according to the memo, while Watson will ``work on transitional issues before taking a new position within the organization.''

James Cowles, 52, who oversaw Citigroup's equities business in Europe, the Middle East and Africa, will lead a newly formed group called Equities Products, comprising stock-trading, equity derivatives and convertible bonds. Peter Santoro, who oversees equities trading, will report to Cowles, as will Joe Elmlinger, 44, who oversees derivatives, Cohen said.

Steve Bowman continues as head of hedge-fund services and global futures, and Ward Marsh, 55, remains in his post as head of municipal securities, according to the memo.

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: November 13, 2007 17:29 EST