July 21 (Bloomberg) -- Citigroup Inc. investment-banking Chairman Michael Klein will leave the biggest U.S. bank, extending a management shakeup following Vikram Pandit's appointment as chief executive officer in December.

Klein, 44, left to ``pursue other opportunities,'' New York- based Citigroup said today in a statement. He was co-CEO of the bank's trading and investment-banking division for 10 months starting in May 2007. In March, Pandit named him chairman of the division, where he was sidelined from day-to-day management and reassigned to a senior client-advisory role.

Pandit, a former Morgan Stanley investment banker who succeeded Charles O. Prince, has been reconfiguring the bank after almost $55 billion of writedowns and losses linked to the collapse of the subprime mortgage market. When he reassigned Klein, Pandit installed a longtime colleague, John Havens, to oversee the trading and investment-banking division.

``Whenever you have a new CEO come in, I would expect to see people moving around, or new people coming in, and some people deciding to leave,'' said Peter Kovalski, portfolio manager at Alpine Woods Investments in Purchase, New York, which oversees about $12 billion and holds about 30,000 Citigroup shares. ``It's either because the chemistry isn't right with the CEO, or they don't like the particular business model that the new CEO's putting in place.''

Citigroup posted a smaller-than-estimated $2.5 billion loss on July 18, and the bank's shares rose 20 percent during the week. Today Citigroup shares gained 34 cents, or 1.8 percent, to $19.69 in New York Stock Exchange composite trading.

CEO Ambition

Dow Jones Newswires reported last December that Klein, a 23- year veteran of Citigroup, was a candidate for the CEO job that Pandit ended up getting. Calls to Klein's office and mobile phone weren't returned.

In the statement, Klein said, ``It has been particularly important for me to assist the company during this challenging year in the markets and in the management succession at the firm.''

Thomas Maheras, who served alongside Klein as co-CEO of the trading and investment-banking division, stepped down in October 2007, when Citigroup began to suffer losses from the subprime mortgage crisis.

Citigroup said in a separate statement today that former IBM Corp. General Counsel Lawrence Ricciardi has been named to the bank's board of directors. Ricciardi also has held posts at RJR Nabisco Inc. and American Express Co. His election expands the number of directors to 15.

Abu Dhabi Talks

Klein led the negotiations for Citigroup in November when it got a $7.5 billion capital injection from the ruling family of Abu Dhabi. He also oversaw the Citigroup team that helped Dow Chemical Co. get financing from Kuwait Investment Authority and Berkshire Hathaway Inc. for the purchase of Rohm & Haas Co. earlier this month.

As an adviser to governments and corporate leaders, Klein made ``invaluable contributions'' to Citigroup, Pandit said in the statement.

Klein has also advised Citigroup on its acquisitions and divestitures, according to the statement. In early 1999, he was given responsibility for the expansion of the bank's European investment-banking business.

``He was a big rainmaker, a big-elephant deal guy,'' CreditSights Inc. analyst David Hendler said. ``They need to get someone of the same stature or even bigger.''

Klein joined the mergers and acquisitions group of Salomon Brothers after graduating from the Wharton School of Business in 1985.

Morgan Stanley

Pandit, 51, has hired at least six of his former Morgan Stanley colleagues since taking over. Other Morgan Stanley executives now at Citigroup include Chief Administrative Officer Don Callahan, Chief Risk Officer Brian Leach and Derek Bandeen, who heads global equities trading in London.

Terri Dial joined Citigroup from Lloyds TSB Group Plc in March to lead the bank's U.S. consumer unit. Pandit also replaced the co-heads of prime brokerage, Ali Hackett and Tom Tesauro, with Nick Roe.

``You never want to see a lot of senior management turnover, because that creates a little bit of disruption to the existing staff,'' Kovalski said. ``Usually there's not a lot of revenue or momentum during these periods, where people are trying to figure out where they stand in the organization.''

To contact the reporters on this story: Joyce Moullakis in London at jmoullakis@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: July 21, 2008 16:22 EDT