Richard Parsons will step down as chairman of Citigroup Inc
Two other board members are also leaving. The moves will leave Citi under the leadership of directors and top executives who came to the company following losses in the financial crisis that required government bailouts.
Parsons, 63, joined the board 16 years ago and became chairman in 2009.
Given the strong position that Citi is in today, I have concluded that the time has come for me to take my leave, Parsons said in a statement.
Vikram Pandit, who became chief executive when former CEO Chuck Prince was forced out in 2007, will remain in that job.
Under Vikram Pandit's leadership, Citi has made remarkable progress. It has emerged from the financial crisis a well-capitalized institution with a clear strategy, Parsons said.
The two other members who will leave are Alain J.P. Belda, a managing director of investment firm Warburg Pincus LLC, and Timothy C. Collins of Ripplewood Holdings. Belda has been on the board since 1997 and Collins since 2009.
The board intends to name O'Neill chairman as part of a pre-existing succession plan, the statement said. O'Neill, 64, has been a director of Citigroup since 2009. He was chief executive of Bank of Hawaii from 2000 to 2004.
Parsons is best known as the politically-connected former chief executive and chairman of Time Warner Inc. He a trustee of a number of New York City cultural institutions and, in the 1970s, Parsons worked as a lawyer in Republican administrations in Washington and New York state.
Mike Mayo, a stock analyst at CLSA and author of Exile on Wall Street, a book critical of Parsons for his chummy relationships with government officials, said the change is good for Citigroup.
O'Neill has been involved with corporate restructurings in the past and Citigroup still needs to dispose of flagging assets left from before the crisis, Mayo noted.
The next chairman should be visible to investors as a clear agent acting on their behalf and not one who is largely defending senior executives or making excuses on why Citi had to be bailed out, Mayo wrote in a research note last week in anticipation of Parsons stepping aside.
Citigroup is the third largest bank based in the United States.
(Reporting by David Henry in New York and Rick Rothacker in Charlotte, North Carolina; editing by Richard Chang and Andre Grenon)