Is Citigroup (NYSE: C) Looking South for Successor to Pandit?

If speculation inside Citigroup (C) is to be believed, then former Latin America head Manuel Medina-Mora may be one step closer to fulfilling a large ambition.

Although current Citigroup CEO Vikram Pandit has only been in his position for 25 months and has no plans to relinquish his job, there is little doubt among industry insiders that Medina-Mora may have the kind of management muscle that Citigroup investors are looking for in their quest for renewed profitability.

Medina-Mora’s star is rising within the beleaguered financial services giant. He has told colleagues of his desire for the top job and, in recent years, has carefully cultivated his personal image.

And it doesn’t hurt that Mr. Medina-Mora’s appeal may come down to location. As the chief executive at Grupo Financiero Banamex for over 10 years, he has been shielded from the controversies surrounding the beleaguered financial services giant.

Michael Mayo, a managing director and banking analyst at Calyon Securities, says Mr. Medina-Mora “has led one area of Citigroup that hasn’t had significant issues. And it doesn’t hurt that Banamex is a favorite of Mr. Pandit who has praised its “universal bank” model of cooperation between different parts of the bank as Citigroup’s future.

In 2001, Mr. Medina-Mora agreed to see Banamex to Citigroup for $12.5 billion. Since then, as head of all Citigroup operations in Latin America, he orchestrated acquisitions and internal growth that expanded Citigroup’s Latin American branch network by more than 50% to about 2,300 branches, while its loan and deposit balances swelled by nearly 75%.

Along with other Citigroup operations in Latin America, Banamex represents $12.1 billion in net revenue – approximately 20% of the total for Citigroup’s core businesses. Such a record may be just what Citigroup needs to break a streak of dispiriting losses and restore credibility with investors and regulators.

The 59-year old Medina-Mora resigned his position last week to devote more attention to a daunting new job. The challenge? Turn around Citigroup’s struggling consumer-banking operations worldwide.

Mr. Medina-Mora’s motivation may be simple enough. He felt he was passed over for CEO partly because of his lack of U.S. banking experience. “He wants to prove himself in a North American environment,” said one person close to Mora.

Skeptics note that Mr. Medina-Mora’s experience is limited to Latin America. However, few other Citigroup executives have the stature to oversee the company’s retail operations that span dozens of countries.

In fact, some regulators have expressed concerns about the shortage of retail-banking experience in Citigroup’s top ranks.

Citigroup’s consumer banking business in North America is far smaller than those of rivals such as Bank of America Corp. (BAC) and J.P. Morgan Chase & Co. (JPM). Analysts also note that it has suffered from a history of lackluster investments and an unfocused strategy.

As a condition of taking over the consumer business, Mr. Medina-Mora has insisted that he be allowed to run the business as he sees fit without interference from other executives.

This has some Citigroup officials concerned of that a clash with Mr. Pandit is a question of when, not if.

It wouldn’t be the first. As opposed to Mr. Pandit who agreed to accept total compensation of $1 until Citigroup returns to profitability, Mr. Medina received 9 million in total compensation for 2009, making him Citigroup’s second highest-paid employee.

And, Mr. Medina-More also won a tug-of-war with Mr. Bandit’s team over the fate of two Banamex subsidiaries, marked for disposal last year but yanked off the market in January after the Mexican banker objected.