Citigroup, one of the largest banks in the world, announced a major reorganization on Wednesday that trims management layers, giving CEO Jane Fraser more direct oversight over its businesses as she aims to boost its profit and share price.
New Leaders for Five Core Businesses
The reorganization involves creating five core businesses that will report directly to Fraser: services, markets, banking, wealth, and U.S. personal banking. These businesses will be led by experienced executives who have proven track records in their respective fields. Here are the new leaders of Citigroup’s core businesses:
- Shahmir Khaliq, Services: A three-decade veteran of Citigroup, Khaliq leads the bank’s services unit, which provides treasury and trade solutions to clients. He is an alum of the London Business School and the London School of Economics. Fraser calls the business a “jewel in the crown” and told investors at a conference on Wednesday that Khaliq had “a proven track record of being the best in the industry”.
- Andrew Morton, Markets: Morton runs the bank’s trading division, which handles fixed income, currencies, commodities, equities, and derivatives. He previously led its G10 rates and financing businesses. Morton started out as an academic in mathematical finance. He co-authored the literature behind the Heath-Jarrow-Morton Model on bond pricing. Before joining Citigroup in 2008, Morton spent 15 years with Lehman Brothers, where he held several roles including the global head of fixed income. Fraser said Morton was “a very well-respected leader in the industry and amongst our most demanding of clients”.
- Peter Babej, Banking (Interim): The interim head of banking was previously the CEO of Citigroup Asia Pacific, a role in which he helped expand its institutional and wealth management businesses across the region. He also played a key role in selling overseas consumer businesses as part of Citigroup’s efforts to simplify. Babej previously worked at Deutsche Bank and Lazard before joining Citigroup.
- Andy Sieg, Wealth: The incoming head of Citigroup’s wealth management unit starts on Sept. 27, after running Bank of America’s powerhouse Merrill Lynch Wealth Management division since 2017. He will oversee Citigroup’s private bank, consumer wealth business, and Citi Personal Wealth Management. Fraser said she was “very confident that he is going to be able to really drive the scaling up and realizing that full potential” of the wealth unit.
- Gonzalo Luchetti, U.S. Personal Banking: Luchetti leads the unit that houses Citigroup’s consumer and credit card businesses in the U.S., which account for about 40% of its global consumer revenue. He was previously the head of the consumer bank in Asia and Europe, Middle East and Africa. Fraser said he was “very digital savvy” and had “a deep understanding of our customers’ needs”. Before joining the bank in 2006, he worked at JPMorgan Chase and Bain & Company.
Aiming for Higher Returns and Efficiency
The reorganization is part of Fraser’s strategy to improve Citigroup’s performance and efficiency, which have lagged behind its peers for years. Fraser, who became the first woman to lead a major U.S. bank in February, has pledged to streamline Citigroup’s sprawling operations, invest more in technology and innovation, and focus on profitable growth areas such as wealth management.
Fraser said the new structure would allow her to have “more direct line of sight” into the businesses and “greater accountability” from the leaders. She also said it would help Citigroup achieve its financial targets, such as improving its return on tangible common equity (ROTCE) from 10.9% in 2020 to 12-13% in 2023.
Citigroup’s shares rose 1.4% on Wednesday after the announcement, outperforming the broader market and its rivals. Analysts welcomed the reorganization as a positive step towards simplifying Citigroup’s complex organization and enhancing its profitability.
