Citibank chief has ties to Boston

McQuade, who helped build FleetBoston Financial into a regional behemoth before helping to engineer its sale to Bank of America, was tapped yesterday to become chief executive of Citibank, the nation’s third-largest bank, with more than $1 trillion in assets. His appointment was part of a major shuffling in Citi’s executive suites by chief executive Vikram Pandit.

McQuade, 60, faces the challenge of cleaning up Citibank’s troubled balance sheet and paying back $45 billion in government aid the company has received since last fall. McQuade estimated it would take two to three years to turn the bank around.

Citigroup was one of the banks hit hardest by the recession and credit crisis with risky investments that collapsed when the housing and stock markets deflated. Some analysts also said the financial giant was so sprawling it was difficult to manage.

“I do like challenges,’’ said McQuade, who said he was recruited for the Citibank job while recently vacationing in Italy. “This is about the best one around.’’ He will begin Aug. 1.

McQuade dodged a major bullet when he turned down the top job at Freddie Mac in September 2007, just before the mortgage giant began its slide into government receivership. McQuade was chief operating office at Freddie Mac and on track to succeed CEO Richard Syron, another former Boston bank executive, when McQuade said he decided to return to his roots working at traditional banks.

Of his departure at the time, McQuade said, “I’d rather be lucky than smart.’’

After that McQuade returned to Bank of America, where he was a vice chairman, and president of its Merrill Lynch unit.

McQuade began his career as a certified public accountant and joined Fleet in 1992. He helped Fleet cope with a surge in bad loans during the region’s last major recession. And as Fleet’s chief financial officer, McQuade helped chief executive Terrence Murray turn Fleet into New England’s largest bank through a series of acquisitions, including that of BankBoston in 1999. Fleet in turn was swallowed up by Bank of America in 2004, where McQuade became president before jumping to Freddie Mac.

“I think Citigroup has hired a very highly experienced professional banker, who I believe will be a very significant positive for the company,’’ said Gerard Cassidy, a longtime banking analyst for RBC Capital Markets in Portland, Maine. “He’s been a quick study of the issue at hand. He has been able to make difficult decisions quickly.’’

Cassidy said Citibank’s problems are monumental, partly because Citibank is so large. But Cassidy said McQuade faced equivalent challenges at Fleet. “They are bigger in terms of numbers’’ at Citibank. But “in terms of the severity of the problems relative to the size of the institution, I think they are equivalent.’’

A native New Yorker, McQuade said he hopes to recruit some Bay State executives to help him turnaround Citibank.

“I know a lot of people in the banking world and many of them are in Boston,’’ McQuade noted.

Todd Wallack can be reached at twallack@globe.com.