Citigroup Inc. (C) is reorganizing its credit card and retail banking operations in the U.S. to improve service and boost sales, and made management changes within those units, according to Citi memos Wednesday.

Top executives at Citi, the third largest bank in the U.S. by assets, have long felt the bank was too technocratic--focused on products rather than service and selling. Manuel Medina-Mora, consumer chief for the Americas, pledged to change this focus, and in September hired Cecilia Stewart and Jud Linville as heads of retail and cards, respectively, to help design and implement a new strategy.

Wednesday, the two introduced to their staff organizational and management changes the bank hopes will help in targeting the right customers with the right product. In a move to focus more on customers, retail banking and cards will be organized into units focused on customer segments, product development, and distribution.

In a memorandum to Citi's retail banking staff, Stewart said, "We must align ourselves to the segments, strengthen our product and service offerings...enhance the customer experience...and maintain oversight and control of our underlying risks. Achieving this will improve our market position and generate sustained, long-term growth and profitability."

Stewart, the former head of retail banking at Wachovia Corp., joined Citi from Morgan Stanley (MS).

Linville wrote in his memo to the cards staff, "We must first protect our franchise by reinforcing controls" in the rapidly changing environment for the credit and debit card business, "in essence funding our future while restoring our brand strength." He joined Citi from American Express Co. (AXP)

Citi's retail business will have five segments: the branch network, product development, two separate customer segments, and risk and controls.

Middle-market commercial banking also reports to Stewart, and she is apparently satisfied with the unit's results--she made no changes to the business led by Sunil Garg.

Stewart hired Steve Troutner from Bank of America Corp.'s (BAC) mortgage business to head its banking products team, according to a memo. Brad Dinsmore, who headed Citi's North American branch network, will take on another job within Citi--a search for his replacement as the head of Citi's new branch network segment is underway. Citi is also looking for a head of risk and controls.

Venu Krishnamurthy was named in a memo as head of the high-net-worth and affluent segments, which include responsibility for the brokers in Citibank branches. He was previously lead finance officer at Citi's private bank. Deborah McWhinney, who headed the wealth management business for Citibank, changed jobs at Citi last week.

In cards, segments include affluent and co-branded cards; mass market; and loyalty and new products. Linville hired Ralph Andretta from Bank of America to run loyalty and new products and is looking for a head of the mass-market business. The other managers are internal appointments.

Citi has gone through major restructurings, and abandoned the attempt to grow by taking more risk, a strategy that brought it to the brink of collapse. Citi Chief Executive Vikram Pandit re-focused the bank on the deposit, lending, and capital markets businesses and urged greater focus on customers. He has been divesting Citi of a string of businesses that don't generate deposits, and of poor-performing loans and securities that caused painful losses.

But its U.S. retail banking business has until now not undergone any dramatic restructuring. Medina-Mora's strategy is to make use of the businesses Citi is in, and strengthen Citi's presence in major metropolitan markets.

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471;

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