Updated from 12:27 p.m. EDT

Citigroup ( C) CEO Vikram Pandit could have some competition going forward.

At least one analyst is saying that incoming director, former US Bancorp ( USB) Chairman and CEO Jerry Grundhofer could be a viable successor to Pandit if Citi's performance does not improve.

Grundhofer is "well respected in the investment community having made his name as an effective cost-cutter and strong operations man," writes veteran bank analyst Richard Bove, who is now at Rochdale Securities.

"If Citigroup slips again, it is easy to assume that Mr. Grundhofer will take over as CEO," Bove writes. "This should create a healthy tension at the bank and force even better operating performance."

Citi shares closed up 7.7% to $2.51 in recent trading on Tuesday.

The company, which has received $45 billion in government bailout funds and guarantees on some $300 billion in risky assets, on Monday officially named four directors to its board, two of which are former bank CEOs: Grundhofer and Bank of Hawaii's ( BOH) ex-CEO Michael O'Neill. Citi also named William Thompson, the retired CEO of Pimco and Anthony Santomero, who was most recently a senior advisor at McKinsey & Co. and a former president of the Federal Reserve Bank of Philadelphia, to its board.

Citi's stock surged 50% on Monday as investors greeted the news with approval.

"This is a dramatic change in the way Citigroup has selected its directors," Bove writes. "These guys actually know something about banking and capital markets, and can be expected to make their presences known. They are not the typical 'rubber stamp' presences generally found on boards."

But Nancy Bush, an independent analyst at NAB Research, says that under Grundhofer's leadership of US Bancorp, " there was just a sense ... the company was going nowhere." Grundhofer retired as CEO in 2006 and as chairman the following year.

"I think he is a good director," Bush says. "I think he can bring all his years of experience to Citi. But do I see him as a successor for Pandit? No way."

US Bancorp was making a large portion of its revenue off of its securities portfolio, while at the same time losing deposits and suffering from a poor reputation for customer service. CEO Richard Davis -- Grundhofer's handpicked successor -- deserves credit for turning it around, she says.

Even US Bancorp's better-performing fee business and processing business "could not make up for what was happening on the banking side," Bush says. Grundhofer "did not go out with the highest marks from the analyst community."

That has not damped Bove's enthusiasm for the move, however. In the note, Bove wrote he believes Grundhofer's and the other appointments "suggests that the banking regulators are serious."

"Bank boards are likely to awaken from their somnolent states and actually do something positive for shareholders," he writes.

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