Trio of New Citigroup Executives Sparks Succession Talks on Wall Street - Latest Global News

Trio of New Citigroup Executives Sparks Succession Talks on Wall Street

Citigroup CEO Jane Fraser has sparked speculation on Wall Street about a three-way race to succeed her after she hired three outsiders with impressive resumes to help her turnaround the struggling bank.

Executives from accounting firm PwC and rival banking giant JPMorgan Chase – Tim Ryan and Vis Raghavan – joined Citi last week, alongside Andy Sieg, who was brought in from Bank of America last year. The trio completes a leadership team that Fraser hopes will drive a profit-boosting reorganization – and that investors say could produce an alternative boss should Fraser’s turnaround falter.

“She has brought very talented individuals onto the team,” said Brian Mulberry, a director at Zacks Investment Management, which holds Citi shares.

Fraser has led Citi for three years – not a long tenure in the current era of big Wall Street bank CEOs. Last fall, she launched the bank’s biggest overhaul in more than a decade, hoping to revive the nation’s fourth-largest bank, which has been struggling since its near collapse in the financial crisis.

Who she considers as a potential successor could be an indication of which businesses she sees as core to the company’s future. But naming an outsider as her likely successor could also alienate veterans who have their own leadership ambitions and who are already uncomfortable with the idea of ​​an outsider filling top positions.

The new hires have led to a parlor game of thrones, one of the most popular pastimes on Wall Street.

“That’s what she’s doing,” said a portfolio manager at a fund that holds Citi shares, who sees the new hires as an attempt to address the shortage of qualified designated CEOs. “They’re in a strategic dilemma, and [Fraser] probably trying to muddle through as best as he can.”

Analysts, investors and insiders say Fraser has no plans to leave any time soon. Sieg has told employees he is focused on his current role and finds talks about succession a distraction. Raghavan told Fraser during the interview that he was not interested in her job, according to a person who spoke to him. Ryan has told employees he came to Citi to “work for “Jane”.

A representative of the bank declined to answer specific questions about the possible future prospects of the three men. “Like any well-run company, Citi’s board of directors takes its responsibility to have a solid succession plan for the CEO very seriously,” the bank’s board of directors said in a prepared statement.

Citi still has a lot of catching up to do. The corporate and investment bank lost $48 million last year. Citi’s expenses relative to revenue are still significantly higher than its competitors.

Return on equity, a key metric for banks, is in the single digits, about half that of its peers. Fraser has promised to hit those numbers once Citi hits its 20,000 job cut target. Yet the bank recently began signaling to employees that cuts are over for now, even though it is not even halfway to that goal.

Of the three new hires, Raghavan was the most well-known on Wall Street. A 20-year dealmaker at JPMorgan, he will have a larger management role at Citi than he did at JPMorgan and a better chance of one day becoming CEO. Fraser appointed Raghavan as vice chairman of Citi and also took charge of the newly combined investment and commercial banking division.

Earlier this year, JPMorgan appointed Raghavan, 57, as global head of its entire investment banking business. Just a month later, he left the company to take the job at Citi.

“The number of people who trust, respect and admire Vis is quite large,” said a former colleague. “But when you have people like [Raghavan]you will inevitably lose some of your existing talent.”

That scenario is currently playing out in Citi’s wealth management division. Since Sieg, a former Bank of America executive, took over in September, about 20 senior employees have had to leave the bank. He has alienated some Citi veterans by insisting that private bankers document client contacts.

Sieg, also 57, spent the early years of his career in Washington. One of his first jobs at what was then Merrill Lynch was to serve as a point man for then-CEO David Komansky as the company lobbied for the repeal of the Glass-Steagall Act, a Depression-era law that separated banking from other areas of financial services and was repealed in the late 1990s.

“Andy doesn’t get into every detail, but he pressure tests you to make sure you know what you’re doing,” says a former colleague at BofA.

The latest addition is Tim Ryan, who left his position as a senior executive at global accounting firm PwC in the US last month to join Citi. At Citi, Ryan will be responsible for technology and support Citi’s continued transformation. He takes over the positions of Mike Whitaker and Titi Cole, two senior executives who left Citi last month.

“Tim is a great strategic thinker and a guy who gets things done quickly,” says Bob Herz, a former PwC partner who later headed the Financial Accounting Standards Board.

Ryan, 59, who has worked at PwC his entire life, built a reputation for integrity in the firm’s financial services division. As AIG’s auditor on the eve of the financial crisis, he rightly resisted pressure to give the company a clean bill of health.

“Jack Welch had three executives waiting in the wings for his job as GE CEO – that’s not a new strategy for recruiting and retaining top executives,” said Gary Goldstein, a veteran Wall Street recruiter and head of the Whitney Group executive search firm. “I think each of them believes they have the best chance.”

Additional reporting by Brooke Masters and Arash Massoudi.

Sharing Is Caring:

Leave a Comment