Citi’s chief risk officer to depart as bank begins risk management rebuild
The chief risk officer of Citigroup is leaving his post at the end of the year, making way for the company to hire someone else to oversee its massive overhaul of risk management and internal controls.
On Monday in a memo to employees, Citigroup CEO Michael Corbat and his successor, Jane Fraser, announced the pending departure of Brad Hu, a 12-year Citi veteran who has overseen global risk management since January 2013. The pair said Hu has been “an outstanding CRO.”
“We respect his decision to align his own timing with the CEO transition and his desire for the function to reset as Jane leads the management team on the firm-wide transformation that lies ahead,” they wrote, adding that he has “been instrumental in reducing Citi’s risk profile and securing credit upgrades while helping guide [the] institution through significant geopolitical and economic disruptions.”
“At the same time, he prepared our firm to respond to emerging risk areas such as climate change and cyber security,” the two wrote. “He and his team have worked tirelessly to navigate through the pandemic, allowing us to support our clients while keeping credit costs at a reasonable level in an unprecedented environment.”
Troubles with Citi’s risk management and internal control systems resurfaced in August when the bank accidentally paid $900 million to lenders of the cosmetics company Revlon, a mistake the bank blamed on human error. Last month, the Federal Reserve and the Office of the Comptroller of the Currency issued enforcement actions against the bank, including a $400 million civil money penalty.
During the bank’s third-quarter earnings call, analysts pressed Corbat and Chief Financial Officer Mark Mason on how much the overhaul would cost and how long it would take to complete. Mason said Citigroup has spent about $1 billion so far this year to enhance infrastructure, risk and controls, but could not pinpoint a total cost, saying he could not calculate a number for next year or the year after.
A search for Hu’s replacement is underway, a spokeswoman said.
His upcoming departure won’t be the only change to the bank’s management team. On Monday in the same memo to employees, Corbat and Fraser announced that Fraser’s current role as CEO of the global consumer bank will be filled by longtime Citi executive Anand Selva, CEO of Citi’s U.S. consumer bank.
Selva, a 29-year Citi veteran, begins his new job in January, a month before Fraser is set to become the first woman to lead a major U.S. bank. Selva has run the U.S. consumer banking business since 2018 and previously oversaw consumer banking across 17 markets in Asia, Europe, Africa and the Middle East.
Between the first quarter of 2019 and the third quarter of 2020, the U.S. Consumer Bank’s average retail deposits grew 24% while assets under management climbed 22%. Simultaneously, digital deposits rose to $15 billion, mortgage-adjusted net revenue grew 11% and cards grew 4%.
“Anand’s appointment is a testament to the depth of experience he brings to the role and what he stands for as a leader,” Fraser said Monday in a prepared statement. “In the U.S., he has opened the door to what is possible for our franchise, and with the acceleration of digital he is the right leader to take us forward globally. He will play a key role shaping our firm for the future in terms of talent, our business, our operating performance and importantly, the transformation ahead.”
The bank has also begun a search for Selva’s replacement.
There’s one position that won’t be filled when Fraser takes over for Corbat, who is retiring in February. The spokeswoman said Fraser’s role as president, which she gained in conjunction with the global consumer bank CEO role, will be unfilled when the transition happens.