Citigroup has become the first major Wall Street bank to appoint a female chief executive, announcing on Thursday that Jane Fraser will succeed Mike Corbat.
The succession was teed up by the Scottish woman’s appointment as Citi’s president last year, which insiders said was a precursor to her ultimately becoming chief executive of the bank, whose $2.2tn balance sheet makes it one of the world’s top lenders.
“I have often said that I am a steadfast believer in term-limits,” Mr Corbat, 60, wrote in a post on his LinkedIn page. “With that in mind, I have given significant thought to when the time is right for me to hand over the reins and I have decided to retire in February.”
He added: “Jane will become our first female CEO, a point of pride for all of us and groundbreaking for our industry.” At a congressional hearing last year seven bank bosses, including Mr Corbat, failed to raise their hand when asked whether their likely successor was a woman or person of colour.
On his LinkedIn page, Goldman Sachs boss David Solomon congratulated Ms Fraser on being a “pioneer”, while Deutsche Bank’s US boss Christiana Riley told the Financial Times that Ms Fraser’s appointment was a “watershed moment for meritocracy and equality that all women on Wall Street celebrate”.
Mr Corbat’s departure comes as Citi and other big US banks brace themselves for huge loan losses from the coronavirus crisis, after lengthy shutdowns and restrictions plunged the economy into recession and left many businesses and individuals struggling to pay their loans.
Mr Corbat has spent eight years as chief, taking over from Vikram Pandit in the aftermath of the last financial crisis.
Citi, which required one of the biggest bailouts in the crisis, has struggled to rebuild itself. It was hurt by owning a much smaller consumer bank at a time when investors preferred the stability of retail banking to the volatile profits of capital markets and investment banking. Uneven results from its large operations in international markets such as Mexico also weighed on returns.
Citi’s relative underperformance, despite its highly respected global franchise, attracted the attention of ValueAct, an activist investor, which took a $1.2bn position in late 2017.
Still, Citi’s net income more than doubled under Mr Corbat’s time at the top, from $7bn in 2012 to $20bn in 2019.
“There is always more to do,” Mr Corbat said in a statement published by Citi, adding that he believed “the time is right for my successor to lead Citi through this next stage of progress”.
Mike Mayo, an analyst at Wells Fargo and long-time critic of Citi, told clients a “fresh look is good in our view since the prior CEO failed to reach Citi’s targets and move the company enough strategically”. He added, however, that it was “unusual” for a chief executive to leave during a crisis.
A former partner at McKinsey, Ms Fraser, 53, is one of Wall Street’s most senior women, having spent 16 years at Citi and headed its consumer bank since last year. Before that, she headed Citi’s Latin American business.
Colleagues praise her leadership skills and strategic thinking, and her fondness for practical jokes.
“We expect to see a smooth transition . . . and believe she is well qualified to be the new CEO,” said Gerard Cassidy, analyst at RBC.
John Dugan, Citi’s chairman, paid tribute to Mr Corbat. “The board deeply appreciates Mike’s many contributions to Citi, and he will leave the firm in a much stronger position than he found it,” he said.