By David Benoit and Dave Sebastian

Jane Fraser will become the first woman to run a major Wall Street bank, succeeding Michael Corbat as Citigroup Inc. chief executive when he retires in February.

Citigroup tapped Ms. Fraser to serve as the bank's president and to run its global consumer bank last year, a move that established her as the front-runner to succeed Mr. Corbat. But the timing of Mr. Corbat's retirement comes as a surprise; he was expected to remain CEO for another two years.

Mr. Corbat, 60, has run the bank since 2012, stepping in following Vikram Pandit's abrupt departure. The 37-year Citigroup veteran, a fix-it man with a penchant for statistics, is credited with returning the bank to health following its near-collapse during the 2008 financial crisis.

Ms. Fraser, 53, has worked at Citigroup for 16 years. She was sent to clean up a scandal in the bank's important Latin American divisions before moving to New York last year to run the consumer bank. During the financial crisis, Ms. Fraser led the bank's strategy division.

"We believe Jane is the right person to build on Mike's record and take Citi to the next level," Citi's Chairman John Dugan said in a statement.

While Mr. Corbat has won plaudits for steadying Citigroup, analysts and investors were waiting to see more signs of growth.

This was supposed to be the year that Citi showed it had improved its profitability and caught up to its rivals. The coronavirus pandemic and the economic destruction it caused have forced the bank to set aside those targets. But, like its peers, Citigroup has managed to ride out the crisis with its profitability dented but its health intact.

Citi shares have fallen 36% this year, but have risen about 38% since he first took over the bank, slightly underperforming peers.

Mr. Corbat "will leave the firm in a much stronger position than he found it," Mr. Dugan said in the release.

At a congressional hearing last year, Mr. Corbat and other big-bank CEOs -- all white men -- were asked if they were likely to be succeeded by female candidates one day. No one said yes.

Days later, JPMorgan Chase & Co. shortlisted Marianne Lake and Jennifer Piepszak to one day succeed James Dimon as CEO.

Write to David Benoit at david.benoit@wsj.com and Dave Sebastian at dave.sebastian@wsj.com