Turnaround of Citigroup: Challenges Ahead for Jane Fraser
| Case Code: LDEN233 Case Length: 17 Pages Period: 2023-2025 Pub Date: 2025 Teaching Note: Available |
Price: Rs.400 Organization : Citigroup Inc. Industry :Banking Countries : United States Themes: Leadership Style, Turnaround Strategy, Leadership Style,Technology in Healthcare,Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Fraser’s Journey: From Mckinsey to Citi
Fraser, born and raised in Scotland, completed her Master’s in Economics at the University of Cambridge in 1998. She then became an M&A analyst at Goldman Sachs Group (Goldman Sachs) in London at the age of 20. After two years of working at Goldman Sachs, she worked as an analyst at consultancy Asesores Bursatiles in Madrid and learned to speak Spanish..
Fraser: Shattering the Glass Ceiling
In September 2020, Corbat announced his retirement effective from February 2021. Fraser took over, becoming the first ever woman CEO of a big Wall Street Bank and thereby shattering one of the most enduring glass ceilings in finance. Until Fraser, no woman had ever headed a major Wall Street Bank. Commenting on Fraser becoming the CEO, Corbat said..
Challenges Faced by Fraser
Less than a month after becoming the CEO of Citi, Fraser had to deal with regulatory issues at the bank. In 2020, the Federal Reserve and the OCC had fined Citi US$400 million for improper risk management and controls as the bank had accidentally wire transferred US$900 million to Revlon creditors, which was nearly a hundred times more than they had to receive. Commenting on the fine imposed on Citi, Arthur Wilmarth..
The Turnaround Plan
Amidst the various challenges faced by Citi, in September 2023, Fraser announced her plans to turn the bank around. Her strategy was aimed at addressing key issues that had been hindering Citi’s performance compared to its peers like JPMorgan Chase and BoA and its falling stock price.
Challenges Continue…
Amidst Citi’s restructuring efforts, Fraser had to deal with another major challenge. In July 2024, US bank regulators fined the bank US$136 million for its inability to adequately fix data management issues, which had been found in 2020. While the bank had agreed to fix these issues in 2020, the US regulators found that Citi still had deficiencies and had made ‘insufficient progress’ in tackling risk..
The Results
In December 2024, Citi announced its Q4 2024 results. It reported a net income of US$2.86 billion compared to a net loss of US$1.84 billion for the Q4 of 2023. Citibank also reported growth in five of its business units for Q4 2024 (See Exhibit III for comparison of Citi’s Q4 2024 and Q4 2023 financials and..
Appreciation For Fraser
Fraser’s remarkable journey in banking led to her earning several awards and accolades. In 2014 and 2015, she was recognized as the “Number 1 Woman to Watch” by a New York-based publication focusing on the financial services industry, American Banker..
Looking Ahead
Fraser remained optimistic about the transformation of Citi. Speaking to Sonali Basak (she), anchor and lead global finance correspondent at American data, software, media, and financial company Bloomberg LP, about the massive reorganization and the new Citi under her, she said in November 2024,..
Exhibits
Exhibit I: Citi’s S&P Banks Index
Exhibit II: Citi’s Shares Underperforming Compared to its Rivals since 2017
Exhibit III: Comparison of Citi’s Q4 2024 and Q4 2023 Financial Results
Exhibit IV:
Citi’s Five Year Financial Summary
Exhibit V: Citi’s Stock Performance Compared to its Competitors (2020-2024)
Exhibit VI: Net Income of Citi and its Competitors Q4 2024 and 2024 (in US$ billions)
Exhibit VII: Analysts Prediction that Fraser would Miss Citi’s ROTCE Target for 2026
Exhibit VIII: Forecasted ROTCE Target for Citi and its Competitors (2026)
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