Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Citigroup CEO Fraser fights to sell turnaround plan to investors

Stock MarketsJan 14, 2022 03:32PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
3/3 © Reuters. FILE PHOTO: Jane Fraser the CEO of Citibank attends the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 3, 2021. REUTERS/Phil Noble/File Photo 2/3

By David Henry

NEW YORK (Reuters) - Citigroup Inc (NYSE:C) Chief Executive Jane Fraser faces a struggle to convince skeptical analysts and investors that she can turn the bank around despite overseeing a radical overhaul in less than a year at the helm.

Fraser took over at the helm of the Wall Street bank in February 2021, tasked with transforming a business whose share price had lagged rivals like JPMorgan Chase & Co (NYSE:JPM) and Bank of America (NYSE:BAC) during her predecessor Michael Corbat's eight years at the helm.

Since her appointment, she has sought to simplify the firm, overseeing its biggest revamp since the 2007-09 financial crisis. The bank announced plans to exit non-core businesses, including consumer franchises in 13 markets across Asia, Europe, the Middle East and Africa last April.

On Tuesday, it doubled down, saying it planned to sell or spin-off its Mexican consumer business, which Fraser had run as head of the bank's Latin American businesses, prior to becoming CEO.

The bank went further still on Thursday, announcing the sale of its consumer businesses in Indonesia, Malaysia, Thailand and Vietnam.

The decision to sell the Mexican business, which Fraser had previously said had the scale to succeed which the bank's Asian consumer franchises lacked, is arguably her boldest move yet in reshaping the bank.

Citi's CFO Mark Mason said on Friday that the decision to exit that business was driven by the bank's strategy to focus on its institutional business. While the Mexico consumer business had delivered good returns, it would be more valuable to another owner, Mason said.

However, Citigroup's share price continues to lag rivals, suggesting that investors are yet to be convinced that Fraser's turnaround plans will bear fruit anytime soon.

"It is a show-me situation," said analyst Dick Bove of Odeon Capital. "This company has been mischaracterized, mismanaged, and poorly handled by one administration after the other for 25 years," he said.

Since Fraser took up her post last February, its shares have gained 3% compared to JPMorgan shares rising 14%, Bank of America shares gaining 40% and Wells Fargo (NYSE:WFC) rising 55%.

On Friday, the shares were under further pressure, down 2.5% after Citi released earnings showing a 26% slump in fourth-quarter profit as it took a hit from higher expenses and weakness at its consumer banking unit.

Fraser was questioned by analysts on Citi's conference call on the direction of the bank, answering that she aimed for it to be "the preeminent bank for institutions with cross-border needs" and was focused on improving shareholder value.

To be sure, Fraser is less than a year into her mission to turn the bank's fortunes around and investors who support her strategy stress that it will take time for the changes to improve the bank's performance.

However, she must convince analysts and investors scarred by years of disappointment with previous efforts to restructure the business. Prior to handing over the reins to Fraser, Corbat had also exited dozens of non-core businesses.

The business had sprawled under the leadership of Sandy Weill, who led the bank between 1998 and 2003. Weill led the bank through an acquisition spree before its collapse and subsequent $50 billion government bailout.

Bove cited the failed strategies of six previous CEOs before saying that Fraser's plans alone are not enough to attract investors.

The bank habitually lags the financial performance of peers and has been under enhanced supervision from regulators for many of the years since its bailout during the financial crisis.

When Citigroup last changed its leadership in 2012, its shares surged and remained elevated for months after Corbat was installed in place of Vikram Pandit.

Corbat agreed in September 2020 to give up the post to Fraser at the end of February 2021. At the time the bank faced new questions over its financial controls, including that it should have caught an erroneous payment of nearly $1 billion to holders of bonds for which it was the trustee.

Fraser's strategy is designed to simplify the company, improve its focus on its institutional businesses and put its capital to better uses.

"The new Citi is a simpler firm that has greater focus as a global banking, payments, and investing provider to multinational firms and institutions, growing corporates, and affluent individuals," Wells Fargo analyst Mike Mayo, who has an 'overweight' rating on the stock, said in a research note.

However, the plan has not yet lifted the stock.

Bove, who applauds Fraser's moves so far and recommends the shares, blames the lousy share performance on "investor exhaustion."

Citigroup CEO Fraser fights to sell turnaround plan to investors

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email