Jane Fraser hits the refresh at Citigroup

But Citigroup, which was the world’s largest financial services firm, is struggling to keep up with rivals. While Goldman Sachs Group Inc.

and Morgan Stanley have reached new market values, Citigroup is half of what it was in 2006. Its profit and revenue, once about double that of other large banks, have now been lower by JPMorgan Chase & Co. and Bank of America Corp. And last fall, regulators ordered a review of the vast systems behind its extensive operations, again raising questions about the bank’s complexity.

Ms. Fraser, the first woman to run a major US bank, must now revive the $ 2.3 trillion giant.

It will have to juggle to address the concerns of regulators – an expensive, multi-year project – with a reassessment of the bank’s strategy. Ms. Fraser, 53, has already launched a “refresh” that she hopes can be simplified inside and outside the bank, making it easier to manage and improve.

Simplifying Citigroup is a path similar to what its predecessors, Michael Corbat and Vikram Pandit, both tried. But Mrs. Fraser thinks there’s a lot more to do.

“I’m not looking for what’s wrong,” Ms. Fraser said in an interview. “I’m looking for what Citi will be and what works.”

What Citigroup is today is part of the problem.

The bank is a giant on Wall Street, in the service of multinational corporations and in credit cards. It is the second largest consumer banking sector in the United States.

Yields tend to improve with the scale of consumer banking, and rivals Bank of America and JPMorgan have outperformed their retail operations with thousands of branches in cities across the country. Citigroup has fewer than 700 branches in just a handful of cities, relying heavily on a future of strong digital banking, including a partnership with Google.

Citigroup’s power comes from its global corporate bank. It has operations in 96 countries, helping governments and corporations move money around the world. It is also a leader in increasing corporate debt and trading on Wall Street. But those companies do not make as much profit as before, squeezed by the regulations of the crisis.

The combination outperformed rival mega-banks, which kept profits high, with a better balance between their Wall Street and Main Street businesses. Analysts and investors have argued that Citigroup needs to restructure, with suggestions such as giving up all its international consumer operations or buying an American bank. Activist investor ValueAct Capital called for the changes to focus on the institutional business.

“There is no doubt that the two-decade experiment, which is Citigroup, has failed miserably,” said Mike Mayo, a longtime banking analyst and Citigroup critic.

Ms Fraser did not telegraph her plans, but directors said the strategic review would create significant changes. Citigroup recently announced an expansion of wealth management operations. The bank is likely to give up its consumer operations in parts of Asia, including South Korea and Vietnam, said people familiar with the matter. According to one of them, he does not intend to leave the banking institution in any country.

Chief Financial Officer Mark Mason said the decisions would not be based solely on the values ​​of financial profitability that have driven the conversation around Citigroup for years.

“I think our investors are listening: tell us how and why the strategy you developed makes sense,” Mr Mason said. “Then tell us what that means in returns.”

But it is unclear whether immediate plans will be enough to quell criticism. The regulatory consent order could block any significant acquisition for the time being. And some investors and analysts want Citigroup to give up its consumer bank in Mexico or give up trading shares, which did not grow as expected. None is likely at this time, according to people familiar with the bank’s plans.

Ms Fraser said the Mexican consumer bank, which was blamed for the fraud allegations a few years ago, has “a wonderful scale”, a key barometer for their review. Getting rid of the business would be costly, as the unit is tied to a piece of goodwill from the Citigroup balance sheet. With stock trading, executives say the benefits to customer relationships are too great, even if investors can’t see it.

This could leave investors hoping for a second round of restructuring soon.

Today’s Citigroup was created in 1998, a merger between the consumer-oriented Citicorp and the Wall Street bankers of Travel Group. Executives have imagined a one-stop megabank where companies can manage their finances, and travelers who find their globe can always find a Citi ATM.

But Citigroup’s business continued to function as silos, and the benefits of the merger did not materialize as expected. The bank has repeatedly run away from regulators. During the financial crisis, it almost collapsed below the share of toxic mortgage-backed securities. Since then, he has sold assets he considers too risky or too accessory, such as a British music empire, a stake in a Mexican airline, a subprime lender and brokerage Smith Barney.

Ms. Fraser came to Citigroup in 2004 after internships at Goldman Sachs and McKinsey & Co. During the financial crisis, she led the bank’s strategy division, helping to lay the groundwork for asset sales.

She jumped from one job to another, leading Citigroup’s private bank for ultrarich, beaten mortgage unit and outrageous Latin American operations. This has given her experience in many parts of the company, although some people say that this has made it difficult to judge her operational success.

The people who worked with her said that she makes decisions quickly and that she can think strategically in the long run while running a business. Even when they cut jobs, they said, they empathize with their messages.

She is also known for practical jokes. In January, when Mr. Mason connected to the morning meeting of the executive team, he found all his colleagues standing in front of a 20-year-old image of him. It was his birthday at Citigroup. Mrs. Fraser kept it as a background all day.

Citigroup announced in September that it will be CEO. Regulators have stepped up pressure on the bank’s risk management systems, and Mr Corbat has decided to give up because he believes such an expensive, multi-year project is best left in the hands of a successor.

Ms Fraser said the regulatory issue was her highest priority. The bank delivered on time in February to diagnose its risk issues and executives said the relationship with regulators is productive. She called the work a “transformation”, an opportunity for the bank to make changes that are delayed and important from a competitive point of view.

For example, regulators have complained that the bank does not have clear customer data. Citigroup has never built a unitary customer identification system in all its businesses. The remedy would reassure both regulators and help bankers deepen customer relations, executives said.

Ms. Fraser said she knows the job will be a heavy one, but she doesn’t expect her first day as CEO to feel different. It is scheduled for a town hall, a meeting with new employees and a few customer calls. She also intends to call some former colleagues and others to thank you.

Write to David Benoit at [email protected]