Citi considers overhaul that would hand more power to chief Jane Fraser

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Citigroup chief executive Jane Fraser is considering a plan to disband the bank’s biggest division in what would be the most significant shake-up of its corporate structure in nearly 15 years, according to people familiar with the proposal.

The plan would split the Institutional Clients Group — which generated nearly three-quarters of Citi’s $14.8bn in net 2022 profits — into its three primary business segments: investment and corporate banking, global markets and transaction services.

The newly separated units would be run by their current heads, who would report directly to Fraser, handing her greater day-to-day control. The proposal, if adopted, would lead to her biggest revamp of reporting lines since she took over in 2021.

The internal discussions come after the bank this month announced that Paco Ybarra, the 36-year veteran who runs ICG, would leave by the middle of next year. No replacement has been named for Ybarra, and people familiar with the deliberations say the bank is not actively looking for one.

For more than a decade Citi has operated with two divisions: ICG and a consumer-focused division that includes Citi’s retail bank, credit cards and wealth management.

Citi has already said it plans to split wealth management from the rest of its consumer bank. Wealth management will be run by Andy Sieg, who is joining the bank in October after he was recruited from Bank of America.

The ICG break-up under consideration would give the bank a total of five divisions — three commercial business units and two consumer — reporting directly to Fraser. Ybarra’s fiefdom and a similar management group on the consumer side would cease to exist.

Citi declined to comment. The people familiar with the proposal cautioned that no final decision had been made and that the plan is one of a number of options under consideration.

When Citi announced Ybarra’s departure, Fraser told employees that the ICG chief would lead an effort to determine how to “transition his responsibilities” in line with efforts to “simplify our organisational structure”. Fraser said that no decisions had been made, and that she would share more details following an assessment in the next couple of months.

While the proposed plan would give Fraser more direct control, one person familiar with her thinking said she saw the potential break-up as a way to give the business chiefs more influence over their own units and the bank’s broader strategy.

The ICG division was formed in 2009 in an overhaul by then-chief executive Vikram Pandit as he tried to revive the lender following its near-collapse during the global financial crisis.

But the logic behind merging Citi’s various corporate businesses into one unit dates back further, to former CEO Sandy Weill. In the 1990s and early 2000s, Weill engineered a series of megamergers in an attempt to realise his vision for a financial supermarket that could offer consumers and corporations a one-stop shop for banking services while benefiting from cross-selling.

Citi’s investment banking division, like rivals on Wall Street, has struggled because of a lack of deals, while its trading business recently reported a lacklustre second quarter.

The standout business has been Citi’s transaction services division — which houses its vast payment processing and cash management network — though revenue growth there has been slowing this year.