Citigroup : Jane Fraser to Succeed Michael Corbat as CEO -- 3rd Update

By David Benoit and Christina Rexrode

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 into 2022.

Mr. Corbat, 60 years old, 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 2008-09 financial crisis.

He will be the first Citigroup leader to leave on his own terms since the bank's architect, Sandy Weill, retired in 2003.

Ms. Fraser's ascension to one of the most sought-after jobs in finance is a huge step for women on Wall Street. The industry's top ranks remain stubbornly male, despite efforts to recruit and elevate more women. Men run the major Wall Street banks -- a group that includes JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. -- and they always have.

Ms. Fraser's appointment as the bank's first female CEO is "a point of pride for all of us and groundbreaking for our industry," Mr. Corbat said in a memo to employees.

Ms. Fraser, 53, has worked at Citigroup for 16 years. The bank has tapped her to handle a number of difficult tasks.

During the financial crisis, she ran the bank's strategy division, laying the groundwork to shrink the bank and sell units like the Smith Barney brokerage. That role gave her a vision of what Citigroup could become, but she asked to run a business. Citigroup tapped her to shore up its private bank for the ultrarich.

A few years later, Mr. Corbat called her at home in London. She had just returned from a work trip to Kuwait and Qatar, she said, and Mr. Corbat asked her to move to the St. Louis, Mo., area to run the bank's mortgage unit. At the private bank, Ms. Fraser dealt with multimillionaires. In St. Louis, her job would be to look after a battered business serving homeowners worried about foreclosure.

"A few of my friends asked me if I was out of my mind," the Scotland-born Ms. Fraser said at a 2014 conference. "The British term is daft."

Her new employees, Ms. Fraser said at the conference, wondered what a British woman could do for their business. At her first town hall with the group, she donned a Cardinals jersey.

"Those are the moments you're standing there and you just have to leap in there head first and go for it....You just have to be 'all in' -- mind, heart, guts, hours." Women, she said, should be less shy about their strengths.

In 2015, Citigroup sent her to Mexico to run the bank's scandal-marred Latin American business. The previous year, the bank had said its Mexico unit had been duped in an alleged accounting fraud by an oil-services firm.

She moved to New York in 2019 to run Citigroup's consumer bank. She has led the bank's emergency response to the coronavirus in North America, an assignment that has put her in touch with leaders across the bank.

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

Eight years ago, Mr. Corbat took over a bank in crisis. Regulators and investors were irritated that Citigroup wasn't moving fast enough to change after the financial crisis. Mr. Corbat worked to smooth over the bank's relationships with its overseers and to shrink a company known for empire-building. He largely stuck to the plan his predecessor and the board of directors had shaped, but picked up the pace.

Still, the bank failed the Federal Reserve stress test in 2014, with the Fed telling Citigroup it had concerns about the bank's general ability to assess risk. The bank renovated its risk models and hired more compliance employees.

Mr. Corbat, his associates said, understood that much of the public distrusted banking -- and Citigroup in particular -- when he took the helm of the bank.

While he has won plaudits for steadying Citigroup, analysts and investors were looking for more signs of growth.

This was supposed to be the year that Citigroup 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.

But old perceptions have proved hard to change. When the bank accidentally sent some creditors of cosmetics company Revlon Inc. a $900 million payment, some analysts said it looked a lot like the Citigroup of old.

Citi shares have fallen 36% this year, but have risen about 38% since Mr. Corbat first took over the bank, slightly underperforming peers. Shares were down about 0.8% midday Thursday at $50.99.

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

In a memo to employees Thursday, Mr. Corbat said it is the right time for a new leader to take over. Ms. Fraser, he said, should be the one to lead a planned multiyear investment in its global infrastructure and controls.

In her own memo, Ms. Fraser pledged to ready Citi for a more digital world. "We need to move from remediating to fundamentally transforming our risk and control environment; and we need to ensure that we have a culture which demands excellence in these areas because it will ultimately make us more competitive and improve our ability to serve our customers and clients," she wrote.

Women occupy relatively few senior roles in the banking business and on Wall Street. 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 CEO James Dimon. Citigroup followed suit later that year, putting Ms. Fraser in line to replace Mr. Corbat.

Write to David Benoit at [e-mail] and Christina Rexrode at [e-mail]