April 24 (Reuters) - Citigroup C.N has hired investment banking veteran Klaus Hessberger to co-lead its newly formed Financial and Strategic Investors (FSI) arm, according to an internal memo seen by Reuters on Friday.

The banking giant is replacing its Global Asset Managers (GAM) group with the FSI arm, which will focus on financial sponsors, sovereign wealth funds, and family offices, said the memo from Citi's Head of Banking and Executive Vice Chair, Vis Raghavan.

Hessberger, who is currently the global co‑head of Lazard's LAZ.N Financial Sponsors Group will co-lead FSI out of London with current North America GAM leaders, Michael Marcus and Michael Quadrino, the memo showed.

Current GAM leader Ashu Khullar will step down and explore other senior roles within the company, the note added.

Incoming investment banker Hessberger has over three decades of experience in the industry, including 25 years at JP Morgan JPM.N in several senior leadership roles.

Additionally, the memo said Citi will establish Global Infrastructure Coverage as an independent vertical led by insider Todd Guenther in the midst of exceptional levels of activity within the infrastructure space.