Jane Fraser is upgrading to Citigroup

But Citigroup, which used to be the world’s largest financial services firm, is struggling to keep up with rivals. While Goldman Sachs Group Inc.

and Morgan Stanley are reaching new market value highs, Citigroup’s is half what it was in 2006. Its profit and revenue, once about double that of other large banks, have now been abandoned by JPMorgan Chase & Co. and Bank of America Corp. I, last fall, ordered regulators to review vast systems that underpinned its extensive operations, raising new questions about the bank’s complexity.

Ms. Fraser, the first woman to run a major U.S. bank, now has to reinvigorate the $ 2.3 trillion giant.

He will have to juggle in response to regulators ’concerns (an expensive, multi-year project) with a reassessment of the bank’s strategy. Ms Fraser, 53, has launched an “update” that she hopes can simplify the bank inside and out, making it easier to implement and improve.

Simplifying Citigroup is a path similar to the one attempted by his predecessors, Michael Corbat and Vikram Pandit. But Ms. Fraser believes there is so much more to do.

“I’m not looking for what’s going on,” Ms. Fraser in an interview. “I’m looking at what Citi will be and what works.”

What Citigroup is today is part of the problem.

The bank is a giant on Wall Street, at the service of multinational corporations and on credit cards. It is second tier in US consumer banking.

Yields tend to improve with the scale of consumer banking and rivals Bank of America and JPMorgan have overfed their retail operations with thousands of branches in cities across the country. Citigroup has less than 700 branches in just a handful of cities, betting on a highly digital banking future, including the upcoming partnership with Google.

Citigroup’s power comes from its global corporate bank. It has operations in 96 countries, helping governments and businesses move money around the world. He is also a leader in raising corporate debt and trading it on Wall Street. But these companies are not getting as high returns as before, pushed by crisis-era regulations.

The combination has outperformed rival mega-banks, which have kept profits high with a better balance between their Wall Street and Main Street businesses. Analysts and investors have argued that Citigroup needs to restructure, with suggestions such as abandoning all its international consumer operations or buying a US bank. Activist investor ValueAct Capital has urged the changes to focus on institutional business.

“There is no doubt that the two-decade experiment that is Citigroup has failed in every way,” said Mike Mayo, a longtime banking analyst and critic of Citigroup.

Ms Fraser has not telegraphed her plans, but executives said the strategic review will create significant changes. Citigroup recently announced an expansion of wealth management operations. The bank is likely to abandon its consumer operations in some areas of Asia, including South Korea and Vietnam, people familiar with the matter said. According to one person, he has no plans to leave institutional banking in any country.

Chief Financial Officer Mark Mason said the decisions will not be based solely on the financial return metrics that have driven the conversation around Citigroup for years.

“I think our investors are listening: tell us how and why the strategy you came up with makes sense,” Mason said. “Then tell us what that means in returns.”

But it is unclear whether immediate plans will be enough to appease critics. The regulatory consent order could, for now, preclude any substantial acquisition. And some investors and analysts want Citigroup to abandon its Mexican consumer bank or end equity trading, which has not grown as expected. Neither is likely at this time, according to people who know the bank’s plans.

Ms. Fraser said Mexico’s consumer bank, which was dragged down by allegations of fraud several years ago, has a “grand scale,” a key barometer for its review. Getting rid of the business would be costly because the unit is tied to a good amount of goodwill on Citigroup’s balance sheet. With equity trading, executives say the benefits to customer relationships are too great, even if investors can’t see it.

This may leave investors hoping for a second round of restructuring soon.

Today’s Citigroup was created in 1998, a merger of consumer-focused Citicorp, and the Wall Street bankers of Travel Group. Executives envisioned a single megabank where companies could manage their finances and global travelers could always find a Citi ATM.

But Citigroup’s business continued to function as silos and the profits from the merger did not materialize as expected. The bank repeatedly repeated the regulators. During the financial crisis, it almost collapsed under the weight of toxic mortgage-backed securities. Since then, he has sold assets he considered too risky or too many accessories, such as a British music empire, a stake in a Mexican airline, a subprime lender and broker Smith Barney.

Ms. Fraser came to Citigroup in 2004 after going through Goldman Sachs and McKinsey & Co. During the financial crisis, he led the bank’s strategy division, helping to lay the groundwork for the sale of assets.

He has jumped from job to job, running Citigroup’s private bank for the ultra-rich, battered mortgage unit and outrageous Latin American operations. This has provided him with experience with many parts of the company, although some say it has been difficult to judge his operational success.

People who have worked with her said she makes decisions quickly and can think strategically in the long run while running a business. Even when they cut jobs, they said, he wraps his messages with empathy.

She is also known for her jokes. In January, when Mr. Mason started the morning session of the executive team, he found all his colleagues sitting in front of a 20-year-old image of him. It was his birthday at Citigroup. Mrs. Fraser kept it as a background throughout the day.

Citigroup announced in September that it would be CEO. Regulators were increasing pressure on the bank’s risk management systems and Corbat decided to step down because he felt such an expensive, multi-year project was better left in the hands of a successor.

Ms Fraser said the regulatory issue is her top priority. The bank handed in a deadline in February to diagnose its risk issues and executives said the relationship with regulators is productive. She has labeled the work of “transformation,” an opportunity for the bank to make changes that have taken time and are important to competition.

For example, regulators had complained that the bank did not have clear data on customers. Citigroup had never created a unifying customer identification system in all of its businesses. A fix that would reassure regulators and help bankers deepen their relationships with customers, executives said.

Ms Fraser said she knows the job will be a heavy wear and tear, but that she does not expect her first day as general manager to feel different. It is planned for a town hall, a meeting with new employees and some customer calls. He also plans to call some former colleagues and others to thank them.

Write to David Benoit to [email protected]