Citigroup Inc. posted an $8.29 billion fourth-quarter loss, twice as much as analysts had estimated, and said it will split in two under CEO Vikram Pandit’s plan to rebuild a capital base eroded by the credit crisis, Bloomberg reported.

Pandit will undo the legacy of former CEO Sanford “Sandy” Weill by creating Citicorp to house the New York-based company’s global bank, and Citi Holdings, for “non-core” assets, including those guaranteed by the U.S. government.

“The financial supermarket was buried today,” said Bill Smith, founder of Citigroup shareholder Smith Asset Management Inc. in New York, who has repeatedly called for a breakup.

A dwindling capital cushion and sinking stock price forced Pandit to abandon Citigroup’s decade-old strategy of providing investment advice and insurance alongside branch banking, stock underwriting and corporate lending. He’s shedding units to free up capital and save the bank from insolvency.

“They are going to try to home in on what’s worth something, and try to sell the pieces that they really can’t value,” Todd Colvin, vice president of MF Global Inc., said in a Bloomberg TV interview.

Citigroup’s lead independent director, Richard Parsons, said today in a statement that the bank also plans to shake up its board of directors. He didn’t provide details. Shares of Citigroup rose 25 cents to $4.08 as of 8:37 a.m. Iowa time.

Citigroup’s announcement came as Bank of America Corp., the biggest U.S. bank by assets, received emergency funds from the government to support its acquisition of Merrill Lynch & Co. Inc.