March 20 (Bloomberg) -- Citigroup Inc., whose biggest shareholder may soon be the U.S. taxpayer, reassigned Chief Financial Officer Gary Crittenden to oversee the Citi Holdings unit that houses $850 billion of assets the bank plans to sell.

Crittenden, 55, is the former American Express Co. CFO who joined Citigroup in March 2007. He will be replaced by global banking head Edward “Ned” Kelly, also 55, who joined the company in February 2008 from Carlyle Group, Citigroup said today in a statement.

The announcement “reads more like semi-retirement for Mr. Crittenden as opposed to a forced exit,” Jeffery Harte, an analyst at Sandler O’Neill & Partners, wrote in a note today. “We are not getting the sense that Crittenden’s apparent semi- retirement foreshadows that the disclosure of a new financial problem is imminent.”

Citigroup Chief Executive Officer Vikram Pandit is paring units unrelated to his main banking and trading businesses to restore profit following last year’s record $18.7 billion loss. Citi Holdings was created in January to manage the CitiFinancial consumer-finance, Primerica insurance and other units deemed not essential.

Shares of Citigroup, down 88 percent in the past year, climbed from less than $1 this month after Pandit said the bank was profitable in January and February. Citigroup rose 2 cents, to $2.62 as of 4 p.m. in New York Stock Exchange composite trading. Steve Cohen, a spokesman for the New York-based bank, declined to comment beyond the statement.

Board Revamp

Crittenden’s replacement comes the same week that Citigroup nominated four new board members, including former U.S. Bancorp CEO Jerry Grundhofer, in a government-induced shakeup after the Obama administration orchestrated the bank’s third rescue attempt in five months. In January, the bank named former Time Warner Inc. CEO Richard Parsons to replace Win Bischoff as chairman. Long-term board member Robert Rubin also announced he won’t stand for re-election. Shareholders vote next month on a proposal that leave the government as the bank’s biggest investor.

While at American Express, Crittenden helped CEO Kenneth Chenault focus on credit cards, spinning off the asset- management and brokerage arm now known as Ameriprise Financial Inc.

Corbat’s Role

“He had a great job at American Express and he took this challenge at Citigroup and now is taking this challenge of running Citi Holdings,” said Richard Bove, an analyst at Rochdale Securities in Lutz, Florida. “If he pulls it off, his value in the marketplace will skyrocket.”

Crittenden will work with Mike Corbat, the interim CEO of Citi Holdings, which will have about 100,000 employees. Overall, Citigroup had about 323,000 employees at the end of last year, including staff of the remaining banking operations, who are being grouped under the name Citicorp.

Kelly was president of Citigroup’s alternative investments unit, in charged of boosting returns from private equity, hedge funds and real estate. Pandit headed that until October 2007, when former CEO Charles “Chuck” Prince combined it with trading and investment banking into the Institutional Clients Group. Prince promoted Pandit to head the unit, and John Havens took over as head of alternative investments.

Prior to joining Carlyle in July 2007, Kelly was vice chairman of PNC Financial Services Group Inc. following PNC’s purchase of Mercantile Bankshares Corp. He was CEO of Mercantile from March 2001 through March 2007. He also held senior investment banking positions at what is now JPMorgan Chase & Co. and was a partner at the law firm of Davis Polk & Wardwell.

Monsanto, Sears

Kelly received a bachelor’s degree from Princeton University and a law degree from University of Virginia School of Law.

Before joining American Express, Crittenden was CFO at Monsanto Co., Sears, Roebuck & Co., Melville Corp. and Filene’s Basement Corp. He started his career as a consultant at Bain & Co. and spent five of his 12 years at the Boston-based firm abroad, mainly in Germany.

Crittenden has a bachelor’s degree in management from Brigham Young University and a master’s in business administration from Harvard Business School. He joined American Express in 2000.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net

Last Updated: March 20, 2009 16:19 EDT