In 2021, when Jane Fraser, Citigroup’s chief executive, decided to end its two-decade-long struggle to run Banamex, Mexico’s fourth largest bank, and spin off the lender, she called from New York to ask its chief Ernesto Torres Cantú if she could drop by his Mexico City home.
The first and still the only woman to run a Wall Street bank wanted to deliver the tough news in person. “I know what this means to you, and that it won’t be easy,” Fraser said to Cantú. “But I also know it is the best thing to do for our strategy and for Banamex.”
Cantú says he froze, but quickly accepted the assignment. The two then headed out for tequila.
Now, Fraser is being equally blunt as she embarks on an even bigger shake up. Announcing plans to streamline the lender’s unwieldy management structure that are likely to involve huge job cuts, she told employees at a recent town hall to prepare to be “uncomfortable” and get behind her or “get off the train”.
Citi, once the US’s largest financial supermarket, nearly collapsed in the 2008 crisis and has struggled ever since. Praise for Fraser’s historic appointment in 2021 has been followed by criticism that the former consultant needs to deliver on her promises of change more quickly.
“A lot of institutional investors have just given up on them,” says Christopher Whalen, a veteran bank analyst who is the head of Whalen Global Advisors. “She realises that if she doesn’t get their costs in line with the rest of their competitors this is an existential crisis for Citi.”
And 18 months after announcing plans to dispose of Banamex, Citi has still not cut the cord. Meanwhile, the bank’s share price, which got a limited bounce from the recent restructuring announcement, has also lagged behind those of US rivals since her appointment.
Fraser, 56, was born in St Andrews, Scotland. She studied economics at Cambridge, and started as junior analyst in M&A at Goldman Sachs’ London office before landing a consulting gig at McKinsey.
Vik Malhotra, one of Fraser’s bosses there, remembers calling the chief of a Canadian bank that had hired the consulting firm. The banker quickly cut Malhotra off, politely asking him not to call again because he preferred to work with Fraser.
“My ego was a bit bruised but I was also proud,” said Malhotra. “Her focus on clients and her ability to communicate with empathy was unmatched.”
Fraser jumped to Citi in 2004. Shortly after the financial crisis, she landed one of the toughest assignments at the bank: turning around Citi’s mortgage division, the unit that had created many of the toxic loans that had nearly taken down the bank in the financial crisis, and which was now much larger than it needed to be.
Worse, she took the top job at CitiMortgage just weeks after the now infamous “taper tantrum” of 2013, a policy mis-step by the US Federal Reserve that briefly caused interest rates to spike and dried up demand for mortgage loans. Almost immediately, Fraser went on a tour of the country, personally delivering the bad news of redundancies to the offices where much of the mortgage operations were based.
After a year running mortgages, she was sent to Latin America to clean up a mess of bribery allegations and a massive fraud that had cost Banamex hundreds of millions of dollars. On her first trip down to Mexico City, Fraser checked into a hotel, and didn’t check out until 100 days later.
“She came in and stood in front of nearly 100 of the bank’s most senior executives in the region and spoke to them in fluent Spanish and just blew them away,” said Citi’s former vice-chair Michael Helfer, who accompanied Fraser and had to listen through a translator. “She had clearly done her homework and knew what had to get done.”
As CEO, colleagues say, Fraser has until recently put client relationships, and gaining the confidence of employees, ahead of any major strategic moves. Her contacts with the head of Porsche helped land Citi a top slot on the sports car company’s IPO, one of the biggest deals of last year.
Paul McKinnon, former head of human resources at Citi, sat a few doors down from Fraser in her first few years at the bank. He says she was both serious about learning as well as making connections with people, often through humour. McKinnon, who often wore cowboy boots and took them off during meetings, said Fraser would regularly hide them when he wasn’t looking. “You always knew it was her because she would be smiling right at you,” said McKinnon.
Fraser has said her new organisational plan is aimed at improving engagement with clients. She is eliminating much of the bank’s geographic management structure and dividing it into five business units that will all report directly to her.
However, she announced the restructuring plan without a permanent head of corporate and investment banking. “Morale is terrible and the CEO is taking direct oversight of businesses with which she has nearly zero experience. What’s not to like?” says one top 10 investor.
But Raymond McGuire, formerly of Citi and now at boutique investment bank Lazard, insists that Fraser’s plan is exactly what’s required if Citi is to compete with rivals on Wall Street and elsewhere. “She was dealt a very difficult hand that she is playing well.”
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