Citigroup Reshuffles Execs, Sparks CEO Succession Buzz

Key Takeaway

• Citigroup's CEO Jane Fraser has appointed Tim Ryan, Vis Raghavan, and Andy Sieg to key roles, sparking succession speculation.
• Citi faces financial challenges with a $48 million loss in its corporate and investment bank last year and high expense ratios.
• New hires aim to revitalize Citi's performance; notable appointments include Robert Nakamura as Japan country officer.

Leadership Changes at Citigroup

Citigroup's CEO, Jane Fraser, has recently made significant leadership changes by bringing in three high-profile executives from outside the company. Tim Ryan from PwC, Vis Raghavan from JPMorgan Chase, and Andy Sieg from Bank of America have joined Citi to aid in its turnaround efforts. These appointments have sparked speculation about a potential three-way race for Fraser's successor. Brian Mulberry, a director at Zacks Investment Management, commented, "She has brought in very talented individuals." The new hires are seen as a strategic move to address a lack of qualified chiefs-in-waiting, according to a portfolio manager at a fund holding Citi shares.

Fraser, who has led Citi for three years, launched the bank's most significant revamp in over a decade last autumn. This reorganization aims to revitalize the bank, which has struggled since its near-collapse during the financial crisis. However, appointing outsiders to top roles could alienate long-time Citi veterans with their own leadership ambitions. Despite the speculation, analysts and insiders indicate that Fraser has no immediate plans to leave. Sieg and Raghavan have both expressed their focus on their current roles, while Ryan has stated he joined Citi to "work for Jane."

Financial Performance and Challenges

Citigroup continues to face financial challenges, with its corporate and investment bank losing $48 million last year. The bank's expenses as a percentage of revenue remain significantly higher than those of its rivals. Additionally, Citi's return on equity is in the single digits, about half of what competitors produce. Fraser has promised to match these levels after completing a lay-off target of 20,000 job cuts. However, the bank recently signaled to employees that cuts are over for now, despite being less than halfway to that goal.

The most high-profile hire, Vis Raghavan, a 20-year veteran JPMorgan dealmaker, has been named a vice-chair of all of Citi and will run its newly combined investment and corporate banking division. Raghavan left JPMorgan just a month after being named the global head of its entire investment bank to take the job at Citi. A former colleague noted, "The number of people who trust, respect and admire Vis is quite large." However, bringing in new talent like Raghavan has led to some senior departures in Citi's wealth division, which Andy Sieg now heads.

New Appointments and Strategic Moves

Tim Ryan, the latest hire, left his role as the top US executive at PwC to join Citi. At Citi, Ryan will oversee technology and assist with the bank's ongoing transformation, taking over roles from departing executives Mike Whitaker and Titi Cole. Bob Herz, a former PwC partner, praised Ryan, saying, "Tim is a great strategic thinker and a get-it-done kind of guy." Ryan, known for his integrity, resisted pressure to give AIG a clean bill of health on the eve of the financial crisis.

In another significant move, Citigroup appointed Robert Nakamura as its new Japan country officer. Nakamura, who joined Citi's rates derivatives group in Tokyo in 1993, will also serve as the banking head for Japan. This appointment is part of Citi's broader global restructuring to revive profit and boost its presence in Tokyo. Nakamura will report to Marc Luet, the regional chief in charge of Japan, North Asia, and Australia. The bank aims to extend its yen rates business to regional lenders and target a top-five local ranking for merger advisory.

Street Views

• Brian Mulberry, Zacks Investment Management (Neutral on Citi):

  "She has brought in very talented individuals."

• Portfolio Manager at a fund holding Citi shares (Neutral on Fraser's strategy):

  "They are in a strategic quandary, and [Fraser] is probably doing the best she can at muddling through."

• Former colleague of Vis Raghavan (Bullish on Raghavan's leadership potential):

  "The number of people who trust, respect and admire Vis is quite large. But when you bring in people like [Raghavan], you are bound to lose some of your existing talent."

• Bob Herz, former PwC partner:

  "Tim is a great strategic thinker and a get-it-done kind of guy."