Citigroup Is 'No Longer The Financial Supermarket Of The Past': Fraser

(Yahoo! Finance) - Citigroup (C) CEO Jane Fraser told investors Tuesday that an empire her bank amassed in the 1990s is no more.

"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 paring back its ambitions, shedding businesses and cutting back headcount as it tries to revive its stock price and remove decades of bloat.

Its latest efforts to convince investors that it is heading in the right direction came Tuesday as Fraser and other bank executives made a series of investor presentations focused primarily on its multinational services division, which helps corporations move money around the world.

CFO Mark Mason in his presentation referred to 2024 as an "inflection year" and said by 2026 Citigroup plans to grow its full-year revenue by at least $6 billion while lowering its expenses by at least $500 million.

"We are determined to be the preeminent banking partner for institutions with cross-border needs, a global leader in wealth, and a valued personal bank here in our home market," Fraser said. "We've made significant strides."

Citigroup’s stock rose Tuesday. It is up nearly 17% since the beginning of the year and has outperformed a wider banking industry index (^BKX).

The makeover under Fraser, who took over as boss in March 2021, began roughly two years ago as she tried to focus the company on serving big, multinational corporations, shed what wasn't profitable, and operate more efficiently.

That meant pulling back from consumer banking in various parts of the world. It also meant cutting jobs and reorganizing business lines as part of an internal restructuring that Fraser called the "most consequential" change to how Citigroup operated in nearly two decades.

The strategy amounted to an unwinding of a "financial supermarket" that claimed to offer any and all services needed by consumers, businesses, and governments.

The high point of that model was an era-defining 1998 merger between Citicorp and Travelers engineered by Sandy Weill. The deal shattered 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 since, the colossus built by Weill proved to be too complex and unwieldy to manage effectively, and the 2008-2009 financial crisis dealt another blow to its sweeping ambitions.

The company began to slowly unwind parts of the empire, a process that Fraser accelerated. She decided to exit Citigroup’s municipal bond and distressed debt businesses and reorganized the company into five divisions.

Fraser and her deputies spent much of Tuesday talking about one of those divisions — services — that Fraser has billed as the company’s "crown jewel."

The division helps large multinational companies such as Amazon (AMZN), Alphabet (GOOG) and some governments manage or move money across the world.

These offerings can take the form of Treasury and cash management, cross-border settlement, digital payments, and securities services like currency hedging. The division moves nearly $5 trillion — the equivalent of Germany’s GDP — daily.

"This is a business that is powering global commerce," 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 innovations to the market at the rate that we are."

Both Fraser and Mason also acknowledged the bank still has work to do to bolster its regulatory and compliance functions.

On Monday, the Wall Street Journal reported that the FDIC is likely to vote Thursday to downgrade Citi's so-called living will — a plan for how to wind down the bank in case of a disaster — due to shortcomings in its data management systems.

Fraser did not discuss the specific report but said, "We recognize there are places where progress has been too slow, so we have intensified our efforts in areas such as regulatory processes and the related data remediation.”

Mason added that "we're going to spend whatever it takes to address the consent orders and modernize the firm, as this is an incredibly important body of work and critical to our long-term success."

David Hollerith - Senior Reporter


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