Jane Fraser ascended to the No. 2 job at Citigroup, putting her in position to succeed chief executive officer Michael Corbat and become the first woman to lead a major U.S. bank.
The behemoth lender on Thursday named Fraser as president and handed her responsibility for consumer banking, one of its thorniest turnaround efforts in recent years. Corbat moved to keep Fraser at the bank in a year when her name was mentioned among potential candidates to run Wells Fargo or HSBC.
“It’s a training ground to see if she’s potentially the right person,” said Jeff Harte, an analyst at Sandler O’Neill. “To name her president, both Corbat and the board must see her as the right person to be CEO, but this will be her chance to prove it and get trained.”
Fraser, who oversaw the lender’s sizable operations across Latin America, will run the consumer bank after Stephen Bird departs to pursue an opportunity elsewhere, the company said.
Fraser, 52, is a rare member of his senior executive team with experience in strategic planning and across the firm’s sprawling businesses. She’s known to have surprised skeptics over the years — for example, by speaking fluent Spanish in her first town hall meeting to address employees in Latin America.
“In many ways, Jane helped shape the company we are today,” Corbat, 59, said in the statement announcing her promotion. “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.”
The industry is under mounting pressure to improve diversity of its leadership and elevate women. In April, white men running seven of the largest U.S. banks were grilled at a congressional hearing about why their companies have never put a woman in charge. Several, including Corbat, said they could imagine one succeeding them.
At JPMorgan Chase & Co., CEO Jamie Dimon reassigned some of his top leaders earlier this year, putting two women in positions that could potentially pave a path to the CEO job. In May, Jennifer Piepszak became chief financial officer and joined JPMorgan’s operating committee as Marianne Lake moved to lead the firm’s consumer lending business.
Born in Scotland with degrees from Cambridge University and Harvard Business School, Fraser spent a decade at McKinsey & Co. advising financial firms before joining the bank in 2004. Within three years she was promoted to global head of strategy for the company, ultimately working alongside then-CEO Vikram Pandit to eliminate entire businesses in the aftermath of the financial crisis. She was moved to lead Citigroup’s private bank in 2009.
Fraser was named CEO of the mortgage unit in 2013 and in less than a year was promoted to run the U.S. consumer and commercial banking businesses more broadly — roles that gave her regular face time with regulators and board members as she worked to address mishandling of home loans.
“Expect this to be well received as investors get to know Jane better,” Susan Roth Katzke, an analyst at Credit Suisse Group AG, wrote in a note to clients, pointing to Fraser’s experience, intensity and “solid track record.”
Ernesto Torres Cantu, a 30-year veteran of Citigroup, will succeed her as CEO of the Latin America region.
Fraser’s new assignment will be her biggest test yet. Bird spent years trying to turn around Citigroup’s lagging consumer business, a division that spans the globe and is home to the world’s largest credit-card issuer. In recent years, the firm sought to capture more of its card customers’ banking business — an effort that’s borne some fruit this year.
The unit struggled to meet internal targets. Bird was the sole member of the management committee to receive “underperform” ratings in the proxy statement for the annual shareholder meeting. Directors indicated he fell short in improving the unit’s profitability in 2018.
Still, Bird is viewed within the industry as a contender to run HSBC, which set out in August to find a new leader. He previously ran Citigroup’s operations in Asia — experience that, combined with his tenure in consumer banking, could fit well with London-based HSBC’s heavy presence in the region and sprawling retail business. A spokesman for HSBC declined to comment. The company is set to report earnings Monday.
As president, Fraser will also have to contend with ValueAct Capital Management, the activist hedge fund that took a stake in Citigroup last year. While the bank signed an agreement with the hedge fund to share confidential information about its strategy, governance and planning, the terms of that deal expire in December.
Though Corbat’s tenure as CEO stretches back to 2012, Citigroup has seen an upheaval in its other senior ranks in recent months. John Dugan, the former head of the Office of the Comptroller of the Currency, was named chairman of the board in November. For part of this year, Corbat has lacked a clear second-in-command following the departure of Jamie Forese, who had served as president since 2013.
Forese led the institutional clients group, but even as president he struggled to have his voice heard on the consumer division, a person familiar with the matter said earlier this year. Fraser will have direct responsibility for that unit.
Altogether, two-thirds of the bank’s 15 executive management team members were installed in their current roles since the start of 2018.
“Having a clear No. 2 is a positive from a shareholder perspective as that reduces succession questions longer term,” Brian Kleinhanzl, an analyst at Keefe, Bruyette & Woods, wrote in a note to clients. “Overall, we expect Citi to maintain business as usual.”