Citigroup ( C) CEO Chuck Prince is throwing a bone to his Wall Street critics by moving Sallie Krawcheck out as CFO. Krawcheck will become the new chairwoman and CEO of Citigroup's Global Wealth Management, which includes the bank's big Smith Barney brokerage division and stock research operation. Krawcheck will remain as CFO until a successor is named. The new job is similar to one Krawcheck had at Citigroup before becoming CFO two years ago. To make room for Krawcheck, Citigroup is pushing aside Todd Thompson, who had been with the giant financial-services firm since 1998 and had been CFO immediately before Krawcheck. In a terse press release, Citigroup says Thompson is "leaving to pursue other interests.'' It says departure from the bank will take effect "immediately.'' Two years ago, in a major executive reshuffling, Prince had Krawcheck and Thompson trade jobs. At the time, many applauded the move, as it made Krawcheck one of the highest-ranking female executives on Wall Street. But critics noted that Krawcheck had little background in managing the finances of a bank. In 2003, former Citigroup Chairman and CEO Sandy Weill lured Krawcheck away from Sanford Bernstein, where she was a highly respected stock analyst. Krawcheck was brought in by Weill to help clean up the stench at Citigroup in the wake of the stock research scandal. Citigroup paid one of the heftiest fines of any Wall Street firm over allegations that its analysts were improperly pumping up shares of its investment-banking clients.
But in recent months, investors on Wall Street had soured on Krawcheck, blaming her for the bank's runaway expenses. The problems at Citigroup have led some to argue that Prince should also go because the bank's stock has lagged those of its competitors. The move by Prince is an acknowledgment that the experiment with Krawcheck didn't work. It's also one more attempt by Prince to buy himself some time and appease his critics. Last month Prince named Robert Druskin as chief operating officer. The popular investment banker is being given a free hand to come up with a plan for cutting costs at Citigroup. Shares of Citigroup have rallied since the Druskin appointment. Krawcheck, no doubt, will be warmly welcomed back as the head of Citigroup's brokerage group. People close to the group say that many were saddened when Krawcheck moved on to CFO.