Citigroup makes Fraser president, likely successor to Corbat

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Citigroup promoted Jane Fraser to president, its second-highest post, making her the obvious candidate to someday succeed Chief Executive Michael Corbat and become the first woman to run one of the largest U.S. banks.

Fraser, who oversaw the lender’s sizable operations across Latin America, also will take over as head of consumer banking, replacing Stephen Bird, who’s leaving to pursue an opportunity elsewhere, the company said Thursday in a press release. Fraser’s profile rose this year as her name popped up among potential candidates to run Wells Fargo or HSBC.

“In many ways, Jane helped shape the company we are today,” Corbat, 59, said in the press release. “I remain committed to leading our firm in the coming years and look forward to working even more closely with Jane in her new roles.”

The industry is under mounting pressure to improve diversity of its leadership and elevate women. In April, white men running seven of the largest U.S. lenders were grilled at a congressional hearing about why their companies have never put a woman in charge. Several, including Corbat, said they could imagine one succeeding them.

Speaking at American Banker's Most Powerful Women in Banking and Finance gala earlier this month, Corbat emphasized that the industry needed to do better at ensuring gender equity in both pay and opportunities.

Fraser, 52, is a rare member of his senior executive team with experience in strategic planning and across the firm’s sprawling businesses. She’s known to have surprised skeptics over the years — for example, by speaking fluent Spanish in her first town hall meeting to address employees in Latin America.

“Expect this to be well received as investors get to know Jane better,” Susan Roth Katzke, an analyst at Credit Suisse, wrote in a note to clients, pointing to Fraser’s experience, intensity and “solid track record.”

Born in Scotland with degrees from Cambridge University and Harvard Business School, Fraser spent a decade at McKinsey & Co. advising financial firms before joining Citi in 2004. Within three years she was promoted to be global head of strategy for the company, ultimately working alongside then-CEO Vikram Pandit to eliminate entire businesses in the aftermath of the financial crisis. She was moved to lead Citigroup’s private bank in 2009.

Fraser was named CEO of the mortgage unit in 2013 and in less than a year was promoted to lead the U.S. consumer and commercial banking businesses more broadly — roles that gave her regular face time with regulators and board members as she worked to address mishandling of home loans.

Ernesto Torres Cantu, a 30-year veteran of Citigroup, will succeed her as CEO of the Latin America region.

Tough Test

Fraser’s new assignment will be her biggest test yet. Bird spent years trying to turn around Citigroup’s lagging consumer business, a division that spans the globe and is home to the world’s largest credit card issuer. In recent years, the firm sought to capture more of its card customers’ banking business — an effort that’s borne some fruit this year.

The unit struggled to meet internal targets. Bird was the sole member of the management committee to receive “underperform” ratings in the proxy statement for the annual shareholder meeting. Directors indicated he fell short in improving the unit’s profitability in 2018.

Still, Bird is viewed within the industry as a contender to run HSBC, which set out in August to find a new leader. He previously ran Citigroup’s operations in Asia — experience that, combined with his tenure in consumer banking, could fit well with London-based HSBC’s heavy presence in the region and sprawling retail business. A spokesman for HSBC declined to comment. The company is set to report earnings Monday.

Leadership upheaval

Though Corbat’s tenure as CEO stretches back to 2012, Citigroup has seen an upheaval in its other senior ranks in recent months. John Dugan, the former head of the Office of the Comptroller of the Currency, was named chairman of the board in November. For part of this year, Corbat has lacked a clear second-in-command following the departure of Jamie Forese, who had served as president since 2013.

Forese led the institutional clients group, but even as president he struggled to have his voice heard on the consumer division, a person familiar with the matter said earlier this year. Fraser will have direct responsibility for that unit.

Altogether, two-thirds of the bank’s 15 executive management team members were installed in their current roles since the start of 2018.

“Having a clear No. 2 is a positive from a shareholder perspective as that reduces succession questions longer term,” Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods, wrote in a note to clients. “Overall, we expect Citi to maintain business as usual.”

Bloomberg News