Why Sallie moved at Citi

NEW YORK (Fortune) -- Sallie Krawcheck's job change at Citigroup (Charts) - from chief financial officer and head of global strategy to an operating job, in charge of Global Wealth Management - was practically inevitable. Speculation has swirled for several months that Krawcheck, 42, has been looking to leave the company. Indeed, she felt terribly frustrated in the CFO role, telling friends that the she had enormous responsibility with little control over decision-making.

While she has longed for more authority, some major investors have been harping that Citi needs a more sophisticated financial chief, particularly as the global bank is struggling to reduce expenses and compete with better-performing rivals like Bank of America (Charts) and JPMorgan Chase (Charts).

The official word is that Krawcheck's move is a promotion. That's a stretch, according to the numbers: Global Wealth Management, which includes Smith Barney and private banking, comprises just $10.2 billion of Citigroup's $89.6 billion in 2006 revenues, and $1.4 billion of its $21.5 billion in net income.

But given Krawcheck's hankering to run her own show, the switch is effectively a promotion for her. In 2004, when she took the CFO position, she and Citigroup CEO Chuck Prince agreed that she would stay in the job for two years and then return to an operating role. When Prince came to her recently and offered her the Global Wealth Management post, she responded reluctantly, she admits, because she had run Smith Barney once before moving into the CFO job.

"At first I thought, 'I already did that'," Krawcheck told Fortune. "But I love the business, and the private bank is in 37 countries, which lends a globality to this job that I never had before."

"This is a much better spot for her," says a former Citigroup executive, noting that Krawcheck works well with customers and will likely thrive in the service-centric world of private banking.

At Smith Barney the first time, she was constantly in the field with the firm's brokers and customers. And before joining Citigroup in 2002, Krawcheck was chairman and CEO of stock research boutique Sanford C. Bernstein. This was during the period when Wall Street was under fire for conflicts of interest. Fortune called her "the last honest analyst on Wall Street."

While Citigroup CEO Chuck Prince hangs on to the highest-ranking woman in financial services (Krawcheck is No. 9 on Fortune's 2006 Most Powerful Women in Business list), he has lost another high-level executive, Todd Thomson, who had been running Global Wealth Management and lost out in the Sallie shuffle. (Thomson, who was Citi's CFO before that post, isn't saying what he intends to do next.) Now Prince is under intense pressure to find a new big gun to be Citi's CFO.

Citigroup has appointed a search firm, Prince Goldsmith (unrelated to Prince), to look at internal and external candidates. One prospect is Al de Molina, 49, who quit as CFO of Bank of America in December.

But filling CFO slots is tough today. Like Krawcheck, de Molina wants reward along with the heavy-duty risk of being CFO. He would consider a CFO position at Citigroup - or anywhere else - only if a clear path to the top job comes with it.