Parsons will replace chairman Winfried Bischoff on Feb. 23, The New York Times reported Wednesday.
"Dick will surely play an integral role in helping us place Citi back on the right track and returning the company to a position of sustainable financial success," Chief Executive Officer Vikram Pandit said a statement.
With several Citigroup board members expected to leave soon, Parsons said he planned to "reconstitute the board as directors retire with new members who bring strong, proven business judgment and financial and banking sector expertise."
Former U.S. Treasury Secretary Robert Rubin said two weeks ago he would depart. Others may leave to avoid the embarrassment of being asked to leave, the Times said.
Last week, Citigroup said it would split the company in two after losing $8.29 billion in the forth quarter. The company also split off prized brokerage firm Smith Barney, selling a portion to Morgan Stanley.
Speculation has fallen on chief executive Vikram Pandit. The board has backed its CEO, but some directors have voiced frustration about his leadership, the Times reported.