New York, United States: Citigroup named Jane Fraser as its next chief executive on Thursday, tapping a woman to lead a giant Wall Street bank for the first time.
She will take over the top job in February, replacing Michael Corbat who will retire.
Fraser, who has served as president and CEO of global consumer banking since 2019, will join the board of directors immediately, the bank said. She has held prior roles for Citi in Latin America and in investment banking.
“I am honored by the Board’s decision and grateful to Mike for his leadership and support,” Fraser said in a press release.
“Our balance sheet is strong and our commitment to serving our clients and communities is even stronger. I will do everything I can to make all our stakeholders proud of our firm as we continue to build a better bank and improve our returns.”
The move comes as Citi pivots to a more challenging operating environment as large banks set aside billions of dollars to prepare for bad loans due to the coronavirus.
Other women have become CEOs of big financial companies or in related industries, such as Abigail Johnson at Fidelity Investments and Julie Sweet at Accenture. But in taking the helm of the fourth-biggest US bank by assets, Fraser joins a group of Wall Street CEOs that until now has been exclusively led by white men.
Her appointment to the top job had been telegraphed from her prior promotion in October 2019 to president and head of global consumer banking. Senior women at JPMorgan Chase are also in line to potentially take the top job to succeed Jamie Dimon, who is expected to retire in the coming years.
Corporate America is also under scrutiny over the paltry number of Black leaders in the wake of massive racial justice protests this year.
Industry faces headwinds
After stumbling badly during the subprime mortgage crisis, Citigroup recovered in the ensuing decade after the 2008 financial crisis.
From 2012 to 2019, the banking giant saw net income rise from $7 billion to $20 billion, Corbat said in the press release.
“We went from returning hardly any capital to returning nearly $80 billion in capital to our shareholders over the last six years,” he said.
The improvement coincided with a post-2008 US economic expansion that ended abruptly with the coronavirus outbreak.
In the most recent quarter, Citigroup added $5.6 billion in reserves for bad loans, a factor in a 73 percent drop in profits to $1.3 billion. Large banks are also staring at a lengthy period of low interest rates, putting a damper on another source of profits.
“The pandemic has a grip on the economy and it doesn’t seem likely to loosen until vaccines are widely available,” Corbat said on a conference call with analysts.
The Scottish-born Fraser joined Citi in 2004 after earlier roles at Goldman Sachs and McKinsey & Company. She has spoken openly about being a working mother in finance, recounting in 2016 how she worked part-time at McKinsey.
Having children “humanized me,” Fraser said in the 2016 appearance at the Americas Society. “There is nothing like having children to help you understand where your priorities are.”
Fraser also recounted her sometimes unorthodox career moves, such as exiting as head of the private bank in London in 2013 to oversee a turnaround of the mortgage business from St. Louis, Missouri in the midwest of the United States.
“Everyone thought I was completely nuts,” she said. “I knew I would grow. I knew I would a learn a completely different skill set.”
Shares of Citigroup were flat at $51.41 in late-morning trading.