Jane Fraser’s early career advising financial firms on tough problems is about to come in handy atop Citigroup Inc.
Fraser faces a slew of challenges and several looming deadlines as she becomes chief executive officer of the third-largest U.S. bank . Her to-do list includes overhauling controls to satisfy regulators, reshaping operations around the globe, meeting environmental and workforce-diversity goals and guiding the firm out of a pandemic that’s forced many of its employees home and eroded revenue.
In one sign of what’s ahead, her executive team is likely to tell the Office of the Comptroller of the Currency the company needs to hire thousands of coders and compliance officers to see through mandated improvements, according to a person familiar with the plan. Behind the scenes, the recruiting spree already has begun, pushing up costs this quarter.
“The biggest thing on her plate is going to be the consent orders” issued by the OCC and Federal Reserve last year, said David Konrad, an analyst at D.A. Davidson. “The overall investment in the franchise in terms of technology is probably the thing she has the biggest sense of urgency for.”
Fraser, 53, was a partner at McKinsey & Co. focusing on financial services and strategy before joining the lender in 2006. Her ascent to CEO is both a milestone for an industry dominated by men and a formality. Ever since the board announced in September that she would succeed Michael Corbat this month, she’s been gearing up, overseeing sweeping reviews of business lines, systems and personnel policies — sometimes steeping herself in details.
Fraser already has handed her fellow board members a report showing how millions of pieces of data zip through Citigroup’s systems and laying out steps to fix deficiencies. The plan also was sent to the OCC’s lead examiner for the bank, Greg Sullivan, who now expects quarterly updates until the consent order is resolved.
An even more detailed document, the bank’s so-called comprehensive action plan covering tech and risk management, is due to the OCC in May.
Meanwhile, the Federal Reserve has its own demands. Citigroup has identified gaps in programs for managing liquidity and compliance, and it must next submit a plan to address them.
Through all of this, the New York-based bank is adopting a more hands-on approach to diagnosing and treating its ails.
“We often used outside consultants instead of doing this work ourselves,” Chief Administrative Officer Karen Peetz told a conference in November. “But we are committed for this go-around and for the future that these will be Citi employees who will be working on this.”
The firm predicts tech spending will contribute to an increase in total costs of as much as 3% this year, hindering efforts to improve returns. For her part, Fraser is looking for ways to simplify the company.