Ex-Mercantile official named CFO of Citi

Kelly shepherded sale of Baltimore bank to PNC Financial Services Group in 2007

March 21, 2009|By From Baltimore Sun news services

Edward "Ned" Kelly III, the former Mercantile Bankshares Corp. executive who shepherded the sale of the Baltimore bank to PNC Financial Services Group two years ago, was named chief financial officer of Citigroup yesterday, the latest move in a major management reshuffling at the struggling bank.

Kelly, who has been serving as New York-based Citi's head of global banking, will replace Gary Crittenden, who is moving to a newly created role of chairman of Citi Holdings.

The changes come after the company announced earlier this year that it was splitting into two divisions, with Citi Holdings in charge of noncore businesses such as government-backed risky assets and the Baltimore-based consumer lending arm CitiFinancial. Citi Holdings' assets are expected to be sold or merged, the company has said.

CitiFinancial has about 900 workers in Maryland.

Kelly had been a top investment banker at JPMorgan Chase and a partner at a Washington law firm before becoming Mercantile's chief executive and president in 2001. He added the title of chairman in 2003.

In 2007, Kelly negotiated the sale of Mercantile to Pittsburgh-based PNC for $6 billion. Critics decried the loss of the 143-year-old Mercantile with its 188 branches that had been the largest bank based in Maryland.

Others credited Kelly for nearly doubling Mercantile's assets during his time there and for negotiating a premium price for the bank for shareholders.

After the sale, Kelly briefly served as vice chairman at PNC Financial Services Group. He left in July 2007 to be managing director of the private investment firm of the Carlyle Group, one of the largest private equity firms. In February 2008, he joined Citi as chief executive of Citi Alternative Investments. Kelly has maintained Baltimore ties, serving on the board of trustees of Johns Hopkins Medicine.

Citigroup, which has dealt with a plunging stock price, has been aided by three government rescue attempts. Last month, the bank agreed to the government acquiring up to a 36 percent stake as it contends with mounting losses tied to risky investments in the housing market.

The company has seen several executives depart and be replaced during the past year and a half - including its chief executive - but it is now starting to give new jobs to company veterans as it splits into two divisions.

Yesterday's move came 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. Longtime board member Robert Rubin also announced that he won't stand for re-election.

Citigroup this year also sold controlling interest in brokerage firm Smith Barney to Morgan Stanley.

Shares of Citi closed yesterday at $2.62, up 2 cents.

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