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Citigroup ‘no longer the financial supermarket of the past’: Fraser
Citigroup (WCEO Jane Fraser told investors on Tuesday that the empire her bank amassed in the 1990s no longer exists.
“We are no longer the financial supermarket of the past,” Fraser said during an event in New York City. “Instead, our vision is focused.”
Citigroup is scaling back its ambitions, shedding businesses and reducing headcount as it tries to revive its share price and eliminate decades of bloat.
Its latest efforts to convince investors that it is heading in the right direction came on Tuesday, when Fraser and other bank executives gave a series of investor presentations focused largely on its multinational services division, which helps companies moving money around the world.
Jane Fraser, CEO of Citigroup. (Tom Williams/CQ-Roll Call, Inc via Getty Images) (Tom Williams via Getty Images)
CFO Mark Mason, in his presentation, referred to 2024 as a “turnaround year” and said that by 2026 Citigroup plans to increase its annual revenue by at least $6 billion while reducing its expenses by at least US$500 million.
“We are determined to be the preeminent banking partner for institutions with cross-border needs, a global wealth leader and a valuable personal bank here in our home market,” said Fraser. “We’ve made significant progress.”
Citigroup shares rose on Tuesday. It has risen nearly 17% since the start of the year and outperformed a broader banking sector index (^BKX).
The transformation under Fraser, who took over as chief in March 2021, began about two years ago as she tried to focus the company on serving large multinational corporations, shed what was unprofitable and operate more efficiently.
This meant abandoning consumer banking services in many parts of the world. It also meant cutting jobs and reorganizing business lines as part of an internal restructuring that Fraser called the “most important” change to the way Citigroup operated in nearly two decades.
The strategy amounted to the dissolution of a “financial supermarket” that claimed to offer any and all services needed by consumers, businesses and governments.
The highlight of this model was an era-defining merger in 1998 between Citicorp and Travelers, engineered by Sandy Weill. The deal destroyed a Depression-era division between retail banking and investment banking and cemented Citigroup’s status as the world’s largest financial institution.
In the decades that followed, the colossus built by Weill proved too complex and unwieldy to manage effectively, and the financial crisis of 2008-2009 dealt another blow to his far-reaching ambitions.
The company began to slowly unbundle parts of the empire, a process that Fraser accelerated. She decided to exit Citigroup’s municipal bond and distressed debt business and reorganized the company into five divisions.
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Fraser and his representatives spent much of Tuesday talking about one of those divisions — services — that Fraser called the company’s “crown jewel.”
A Citigroup building in London’s Canary Wharf financial district. (Mike Kemp/In photos via Getty Images) (Mike Kemp via Getty Images)
The division helps large multinational companies like Amazon (AMZN), Alphabet (GOOG) and some governments manage or move money around the world.
These offerings can take the form of treasury and cash management, cross-border settlement, digital payments and securities services such as currency hedging. The division moves almost 5 billion dollars – the equivalent of Germany’s GDP – daily.
“This is a business that drives global trade,” Fraser said. “No one else can compete with our global reach. No one else can match our products, our services and our digital capabilities, and no one else is bringing innovation to market at the pace we are.”
Both Fraser and Mason also acknowledged that the bank still has work to do to strengthen its regulatory and compliance functions.
On Monday, the Wall Street Journal reported that the FDIC will likely vote on Thursday to downgrade Citi’s so-called living will — a plan for how to shut down the bank in the event of a disaster — due to deficiencies in its data management systems. .
Fraser did not discuss the specific report, but said: “We recognize that there are places where progress has been too slow, so we have stepped up our efforts in areas such as regulatory processes and related data correction.”
Mason added that “we will spend whatever is necessary to respond to consent requests and modernize the company, as this is an extremely important body of work and critical to our long-term success.”
David Hollerith is a senior reporter at Yahoo Finance, covering banking, crypto and other areas of finance.
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