In a historic appointment, Jane Fraser was announced to be Citigroup’s latest and first ever female CEO in an announcement made last Thursday. The current president of the third largest bank in America will be replacing Michael Corbat immediately following his retirement in February 2021, after he spent eight years as chief executive.
A 16-year veteran at Citigroup, Fraser is said to be taking on this role amidst pressure, with Citigroup having missed profitability and efficiency targets in recent years. Regardless, Fraser currently runs the bank’s biggest global division and is favorably viewed as the natural successor. Named one of Barron’s 100 Most Influential Women in U.S. Finance earlier this year, Fraser joined Citigroup’s corporate and investment banking division in 2004, following stints at Goldman Sachs and McKinsey & Co. Since joining the major bank, she has held various leadership positions prior to landing the role at the top.
Fraser will be the first ever woman to helm a U.S. bank with no female counterparts amongst the 10 largest U.S. banks. She joins the 31 women among the executives of the 500 companies that make up the S&P 500 stock index. Fraser is growing to become a powerful woman in business and is ranked as the 39th female chief executive on the Fortune 500 list.
Despite the celebrations surrounding the appointment, the timing raises a few questions among analysts, as Corbat was expected to finish his term in two years. Reflecting this sentiment, Mike Mayo, Senior Analyst at Wells Fargo Securities shared, “the timing seems unusual and the news is unexpected - CEOs don’t typically want to leave in the middle of a crisis, [especially] if upside is pending.”
The appointment seemingly coincides with a mishap Citigroup made last month where the bank “accidentally” paid Revlon lenders $900 million in a perplexing misfire. While the bank initially claimed the mistake to be human or clerical, Bloomberg reported that Citigroup narrowed it down to “arcane technology.” It was said that the bank was still completing the process of replacing its outdated software with the industry-standard as of last August, a rather late adaptation. A CNBC report further shared that investors appeared to have perhaps grown impatient with Corbat.
With a Master of Business Administration from Harvard and a Master of Arts in economics from the University of Cambridge, it is suspected that Fraser’s technologically advanced viewpoint on the banking industry is what sets her apart from Corbat. In light of the incident, the bank appears to be backing her stance on bringing the company up to a more competitive standard given the growth of big tech companies that are “unquestionably going to have an impact” on traditional banks.