Now that she has broken Wall Street’s thickest glass ceiling, new Citigroup Inc chief executive Jane Fraser’s next challenge is to achieve what eluded her predecessors — but in the wake of a pandemic.
For years, the expansive consumer and investment bank has repeatedly missed its own targets for boosting profitability, leaving it as the worst performer among the five Wall Street giants.
Despite big investments, the firm last month made headlines for mistakenly wiring US$900 million to hedge funds.
From Washington watchdogs to an activist shareholder, Fraser has to quell any doubts over whether the bank is on the right path.
That is the setting for a drama that will likely captivate Wall Street for years: Will the first woman to run a giant US bank conquer Citigroup’s most intractable challenges?
In tapping Fraser, who takes over from former CEO Mike Corbat in February next year, the board is betting on a former McKinsey & Co partner who already has experience running Citigroup’s strategic team, mortgage unit and consumer bank — areas that are to take center stage as the lender faces the fallout from the COVID-19 pandemic.
Decades ago, she cowrote a book on the barriers companies must overcome to operate around the globe, which includes sections on the one she is now set to lead.
Her appointment is “obviously welcome, but a mixed blessing given the challenges of managing these mega banks,” former Federal Deposit Insurance Corp chairwoman Sheila Bair said. “I wish her the best. Maybe women can succeed where the men have failed. At least she will have her shot.”
However, Citigroup is by no means a glass cliff, in which a woman is elevated to lead at a moment when defeat is probable.
While announcing her ascent on Thursday, the board applauded Corbat for the progress he has made overhauling and simplifying the bank since its near collapse in 2008. Still, Citigroup’s stock price remains less than one-10th what it was before the 2008 crisis.
The company has returned more than US$80 billion of capital to shareholders over past six years.
“Corbat made Citi a better bank,” said Bair, who has long been a fierce critic of its bailout.
Citigroup’s profitability has long lagged its peers.
As the pandemic in April surged across the US, the firm abandoned a target for improving return on tangible common equity, a key measure of profitability, to between 12 and 13 percent. JPMorgan Chase & Co and Bank of America Corp boasted ratios of 17 percent and 15 percent at the end of last year, respectively.
Rivals have seen gains in large wealth and asset management units that rode the wave of a decade-long bull market, while Citigroup sold its brokerage to Morgan Stanley during the last crisis.
Firms like JPMorgan have seized on a strong US consumer while Citigroup’s retail unit is more international.
Under Corbat, Citigroup’s profits more than doubled to almost US$20 billion. He has also sought to make Citigroup a leader on environmental and social issues. The firm won accolades for its commitment to diversity and inclusion when it became one of the first companies to offer an uncharacteristically blunt assessment of the pay gap between men and women in its global workforce last year.
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