Citigroup’s consumer banking chief to leave

Via Financial Times

Citigroup’s head of consumer banking is leaving the company in a leadership shake-up that puts his successor Jane Fraser in a strong position to eventually become chief executive of one of America’s biggest banks. 

Michael Corbat, chief executive, told employees in a memo on Thursday that Stephen Bird, who leads Citigroup’s global consumer banking division, will leave the company to pursue an “outside opportunity”.

Ms Fraser, a 15-year Citigroup veteran who heads its Latin American operations, will succeed him and also become president of the company, a position that has been vacant since former corporate and investment bank boss Jamie Forese left earlier this year.

“A fresh set of eyes in consumer could be a good thing since this is the weak link at Citi,” said Mike Mayo, analyst at Wells Fargo, who has been critical of the bank’s recent performance. “The question is the degree and extent that a fresh look will lead to a more radical consumer restructuring, which we feel is needed,” he continued.

Citigroup’s retail bank is much smaller than those of its big rivals JPMorgan and Bank of America, and revenue growth, returns and efficiency have lagged those two. Also, Mr Bird hit fewer of his performance targets than other Citigroup executives last year. 

The consumer division generates almost half of the company’s roughly $74bn in annual revenue but less than a third of group net income.

The elevation of Ms Fraser, 52, also puts her in a strong position to succeed Mr Corbat, who is expected to step down in two or three years. Other contenders include Paco Ybarra, 57, who succeeded Mr Forese as head of Citigroup’s investment bank earlier this year.

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The succession of changes come as activist investor ValueAct has built up a $2bn stake at the sprawling global banking group. ValueAct is widely credited with precipitating the shake-up at Microsoft that culminated in the departure of chief executive Steve Ballmer. 

The Citigroup management team under Mr Corbat has staked its credibility on hitting its 2020 return on tangible equity target of 13.5 per cent, and better results in the retail division are key to hitting that goal.

This year, the retail operations have shown improving performance, led by surging growth at the bank’s large credit card operation. Deposit growth has also accelerated.

Mr Corbat cast the leadership switch as “talent planning and development” in his memo.

“Jane has been at our firm for 15 years, since she joined from McKinsey to run client strategy in the corporate and investment bank. During the financial crisis, she led our corporate strategy and M&A group and, in many ways, Jane helped shape the company we are today.,” he wrote.

“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.”

Ms Fraser will be succeeded in Latin America by Ernesto Torres Cantu, chief executive of Citibanamex. Mr Corbat said Citigroup would make an announcement regarding its leadership in Mexico in the near future.

Mr Bird was named as a possible candidate for HSBC’s top job, which was filled by Noel Quinn in September.