In 2021, Citigroup Chief Executive Jane Fraser was on the phone from New York when she decided to end the two-year battle to run Banamex, Mexico’s fourth-largest lender, and spin it off Ask Ernesto Torres Cantú, the bank’s chief executive, if he would drop by his home in Mexico City.
The first and only woman to run a Wall Street bank wanted to deliver the grim news personally. “I know what this means to you, it’s not easy,” Frazier said to Cantu. “But I also know it’s the best thing for our strategy and BMX.”
Cantu said he was stunned but quickly accepted the assignment. The two then set off to drink tequila shots.
Now, Frazier is equally outspoken as he embarks on a larger shakeup. She has announced plans to streamline the bank’s unwieldy management structure, which could involve widespread layoffs, and she told employees at a recent town hall to be prepared to be “uncomfortable” and either support her or “get off the bus.”
Citigroup, once America’s largest financial supermarket, nearly collapsed in the 2008 crisis and has struggled ever since. Fraser’s historic appointment in 2021 was praised, but was followed by criticism that the former adviser needed to deliver on her promises of change more quickly.
“A lot of institutional investors just gave up on them,” said Christopher Whalen, a senior bank analyst and principal at Whalen Global Advisors. “She realized it was an existential crisis for Citi if she couldn’t bring her costs in line with other competitors.”
Eighteen months after announcing plans to sell Banamex, Citi has still not found a buyer. Meanwhile, the bank’s shares, which have seen limited rebound from recent restructuring announcements, have also lagged U.S. rivals since she took over.
Fraser, 56, was born in St. Andrews, Scotland. She studied economics at Cambridge University and started as a junior mergers and acquisitions analyst in the London office of Goldman Sachs before landing a consulting job at McKinsey.
Vik Malhotra, one of Fraser’s bosses there, remembers calling the president of a Canadian bank that hired the consulting firm. The banker quickly interrupted Malhotra’s call and politely asked him to stop calling because he preferred to work with Fraser.
“My pride was hurt a little bit, but I was also very proud,” Malhotra said. “Her focus on clients and ability to communicate empathetically are unparalleled.”
Fraser joined Citigroup in 2004. Shortly after the financial crisis, she was given one of the bank’s toughest assignments: turning around Citigroup’s mortgage unit, which had created so many toxic loans that nearly brought the bank down in the financial crisis. The crisis, now, is much bigger than it needs to be.
To make matters worse, she took over the top job at Citi Mortgage just weeks after the infamous “taper tantrum” of 2013, a time when the Fed’s policy missteps caused interest rates to briefly spike and demand for mortgages to dry up. Frazier almost immediately began a national tour, delivering the bad news of the layoffs in person to offices where much of the mortgage business was located.
After a year in the mortgage business, she was sent to Latin America to clean up a mess of bribery allegations and massive fraud that cost Mexican banks hundreds of millions of dollars. When Fraser first went to Mexico City, he checked into a hotel and didn’t check out until 100 days later.
“She walked in, stood in front of nearly 100 of the most senior bank executives in the region, and wowed them by talking to them in fluent Spanish,” said Michael Helfer, a former Citigroup vice chairman who accompanied Frazier. Michael Helfer said. through translation. “She’s obviously done her homework and knows what has to be done.”
As colleagues of the CEO say, Fraser had until recently prioritized customer relationships and winning the trust of his employees over any major strategic move. Her contacts with Porsche chiefs helped Citi gain a lead in the sports car company’s initial public offering, one of the biggest deals last year.
Paul McKinnon, Citigroup’s former head of human resources, sat just a few doors down from Frazier during his first few years at Citigroup. He said that she not only studies seriously, but also often connects with people through humor. McKinnon, who often wore cowboy boots and took them off during meetings, said Frazier often hid them when he wasn’t looking. “You always knew it was her because she would smile at you,” McKinnon said.
Frazier said her new organizational plan is aimed at improving interactions with customers. She is eliminating much of the bank’s geographic management structure and dividing it into five business units, all of which will report directly to her.
However, the restructuring plan she announced did not create a permanent head of corporate and investment banking. “Morale is low and the CEO is directly overseeing a business she has little experience with. What’s not to like?” said one Big Ten investor.
But Raymond McGuire, formerly of Citibank and now at boutique investment bank Lazard, insists Fraser’s plan is exactly what is needed if the bank is to compete with rivals on Wall Street and elsewhere. . “She was dealt a very difficult hand and she played it well.”
stevengandel@ft.com
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