‘Get off the train’: Citi’s Jane Fraser sends tough message on big overhaul

Took the liberty of using my free FinancialTimes trial to post this gem of a failure of a bank for your entertainment:

Citigroup chief executive Jane Fraser has warned the bank’s 240,000 employees it is time to sign up to her overhaul of the bank or “get off the train” as she cuts jobs and hacks back the lender’s top-heavy management structure. 

The uncompromising message appeared to mark a change in tone to some employees given Fraser has cultivated an image of approachability during her more than two years at the head of Citi. It came days after she announced the biggest restructuring in 15 years as she seeks to reorient the bank around its business units rather than its geography. 

“Get on board. We have incredibly high ambitions for this bank and, the train, it’s gonna move fast,” Fraser told employees at a town hall meeting last week, according to people who heard the remarks. “So lean in, help us win with clients, help us deliver the changes, or get off the train.”

Fraser took the helm of the third-largest US bank in 2021 but has yet to deliver on her pledge of making the lender more profitable and less risky. The departure of Paco Ybarra, a 36-year veteran who had a big power centre at Citi, created an opportunity for Fraser to implement the reorganisation, which will effectively give her more day-to-day control. 

Fraser and her executives have not yet put a number on the amount of jobs that will go or announced a cost reduction target, causing frustration internally, according to people briefed on the matter. 

Nor has Fraser named a permanent head of its investment, commercial and corporate bank, a crucial position in the new management structure. Citi has hired executive search firm Egon Zehnder to fill the role, according to three people familiar with the matter, who said the search is in its early stages and focused on external candidates. 

Since Fraser announced the overhaul there have been some senior departures and the pace is expected to accelerate in the next few weeks. Eduardo Cruz, who heads Citi’s Latin American investment banking operations, is leaving the bank, according to an internal memo sent earlier this month. He is among several high-level executives focused on Citi’s non-US business to have left following Fraser’s restructuring announcement, a list that included European unit head Kristine Braden. 

UK employees were told by memo that the bank will start a review process as soon as this week that would lead to a “reduction in roles”. The memo did not say how many positions would be eliminated out of a total of 16,000 UK-based staff. 

“It’s kind of consuming everyone internally. Everyone’s wondering how it affects their business,” said a Citi banker. “She’s got a plan. She’s just not gonna let everyone see it for a while.” 

Internally, some Citi employees say there is enthusiasm for Fraser’s renewed efforts to re-energise and streamline the bank, which some complain is too bogged down by bureaucracy. There is also hope that the move might revive Citi’s stock price, which has fallen by roughly a third since Fraser took over the bank. 

“If it was Jamie Dimon saying that, I’d understand people getting pissed off, but when you are where we are you need to do better,” said one senior Citi banker, referring to the head of JPMorgan Chase. “There’s lots of logic to what she is doing, because we were just running too much cost in this business and we need to get to the right place.” 

Citigroup declined to comment. 

An important facet to Fraser’s plan to revitalise Citi is dismantling the focus on geography that for decades has been a core part of its org chart and identity. In 1998, Citicorp’s John Reed, in promoting its merger with Sandy Weill’s Travelers Group, said it was Citi’s ability to sell a supermarket of financial products “on a local basis” that would make the deal a success. “We minimised our cross-border business,” Reed said a few years after the merger. “We have been embedded in the local economy as a local banker.” 

Even after the financial crisis, then-Citi chief executive Vikram Pandit often talked of wanting to be the top bank in the top 100 cities in the world. 

But some bankers say Citi often becomes mired in a matrix of overlapping leadership. “Any decision that needed to be made had to get approved by three bosses — the head of the country, the head of product and the head of coverage,” said one senior Citi leader who lead a team of bankers located in more than a dozen countries. 

Fraser is trying to rewrite that script. As part of the reorganisation, Citi has named Ernesto Torres Cantú as the sole international head of all of its units outside the US, dispensing with the old model of three regional chiefs. Recommended The Future of Banking Higher interest rates signal end of one-stop shop banks 

“Citi has a number of very good businesses,” said Noor Menai, who spent more than a decade as an emerging markets banker at Citi and is now the chief executive of CTBC Bank USA. “To the extent that the changes make it easier for investors to isolate and see the performance of the individual businesses, I think that’s a good thing.” 

Citi says it is not exiting any of the countries it operates in, and Fraser says she is committed to the bank’s international focus as a critical differentiator from rivals. But she says eliminating much of Citi’s geographic management is a big part of where the bank can cut costs, and simplify. 

“When we formed our regional organisation many, many years ago, it was a very different bank,” Fraser said at an investor conference shortly after announcing the reorganisation. “We just don’t need that type of heavy management structure and local governance and processes.”