Monday, January 17, 2022

FOCUS-Citigroup CEO Fraser is struggling to sell his conversion plan to investors

Must Read

WATCH: Protest about Capita State in the city

WATCH: The city’s dissatisfaction with the...

Unilever will begin negotiations on a £ 50bn GlaxoSmithKline megadeal

Consumer goods giant Unilever is working on a £ 50bn megadeal to buy a stake in rival GlaxoSmithKline,...

Buccaneers beat Eagles to advance to NFL divisional round

TAMPA, Fla. - Tom Brady was thrown for 271 yards and two touchdowns on Sunday, helping the...


NEW YORK, Jan. 14 () – Jane Fraser, CEO of Citigroup Inc., is struggling to convince skeptical analysts and investors that the bank can change it, even though it has overseen a radical transformation in less than a year.

Fraser took over the management of Wall Street Bank in February 2021, when he was tasked with replacing a business whose share price had lagged behind competitors such as JPMorgan Chase & Co and Bank of America when Michael Corbat was in charge for eight years.

Since his appointment, he has sought to simplify the firm, overseeing the biggest update since the 2007-09 financial crisis. Last April, the bank announced plans to abandon non-core businesses in 13 markets across Asia, Europe, the Middle East and Africa, including consumer franchises.

On Tuesday, he said Fraser was planning to sell or spin off a consumer business in Mexico where he had served as head of Latin American businesses before becoming CEO.

The bank went further on Thursday, announcing the sale of its consumer facilities in Indonesia, Malaysia, Thailand and Vietnam.

Fraser’s earlier decision to sell the Mexican business has the scale of the bank’s lack of success in consumer franchises in Asia, making it the boldest step in the bank’s restructuring.

Citi CEO Mark Mason said on Friday that the decision to leave the business was prompted by the bank’s strategy of focusing on its institutional business. While the Mexican consumer business brought in good revenue, it would be more expensive for the other owner, Mason said.

However, Citigroup’s share price continues to lag behind competitors, indicating that investors are not yet confident that Fraser’s turnaround plans will soon bear fruit.

“It’s a situation that shows me,” said Dick Bowe, an analyst at Odeon Capital. “This company has been misrepresented, mismanaged and mismanaged by the administration for 25 years in a row,” he said.

Since Fraser took office last February, his shares have risen 14 percent in JPMorgan, 40 percent in Bank of America and 3 percent in Wells Fargo.

Shares were under more pressure on Friday, falling 2.5% after Citi’s earnings announced, indicating a 26% drop in fourth-quarter earnings as it rebounded from its consumer bank division. hit by high costs and vulnerability.

Fraser was questioned by analysts at the City conference on the bank’s direction, and he said he aimed to be a “reputable bank for institutions with cross-border needs” and focused on improving shareholder value.

True, Fraser has less than a year left on his mission to change the bank’s fortunes, and investors who support his strategy say the changes will take time to improve banking performance.

However, it needs to reassure analysts and investors who have been frustrated for years by previous efforts to restructure the business. Prior to handing over control to Fraser, Corbat had also left dozens of non-core businesses.

The business expanded under Sandy Weill, who ran the bank from 1998-2003. Weil ran the bank through a buying scandal before the collapse and then a $ 50 billion government bailout.

Bove cited the failed strategies of six previous CEOs before saying Fraser’s plans weren’t enough to attract investors.

The bank typically lags behind its peers ’financial performance and has been under increased scrutiny by regulators for many years since it recovered during the financial crisis.

When Citigroup last changed management in 2012, its shares grew and rose for several months even after Vikram Pandit was replaced by Corbat.

Korbat agreed to step down in September 2020 at the end of February 2021. At the time, the bank was facing new questions about its financial controls, including the need to obtain nearly $ 1 billion in misappropriations from bondholders. he was a trustworthy person.

Fraser’s strategy is to simplify the company, improve its focus on its institutional business, and make better use of its capital.

“New City is a simpler firm that focuses more on global banking, payments and multinational firms and institutions, growing corporations and wealthy individuals as an investment provider,” said Wells Fargo analyst Mike Mayo, “overweight. “has a rating. The action is called in the research note.

However, the plan has not yet raised the reserve.

Bove, who has praised Fraser’s efforts so far and recommended shares, attributes the stock’s poor performance to “investor fatigue.”

David Henry’s interview in New York; Edited by Matt Scuffham and Nick Zieminski

.

- Advertisement -
Latest News

WATCH: Protest about Capita State in the city

WATCH: The city’s dissatisfaction with the...

Unilever will begin negotiations on a £ 50bn GlaxoSmithKline megadeal

Consumer goods giant Unilever is working on a £ 50bn megadeal to buy a stake in rival GlaxoSmithKline, which will change the group....

Buccaneers beat Eagles to advance to NFL divisional round

TAMPA, Fla. - Tom Brady was thrown for 271 yards and two touchdowns on Sunday, helping the Tampa Bay Buccaneers start their...

After Unilever offered a shock, competitors are turning their backs on the GSK consumer

GlaxoSmithKline’s consumer hand could lead to a full trade war after...

“Ke, Korean zombies!” – Giga Chikadze is not happy with Chan Sung Jung’s UFC Vegas 46 tweet

Ahead of the UFC Vegas 46 fight card, Giga Chikadze has voiced his opinion that Chan Sung Jung aka “Korean zombie”...
- Advertisement -

More Articles Like This