By Tatiana Bautzer and Manya Saini
NEW YORK (Reuters) – Citigroup’s new head Andy Sieg on Wednesday further reshuffled his leadership team and reiterated financial targets as the bank seeks to attract more investment assets from its clients.
At his first public investor conference since joining Citi in September, Sieg acknowledged the asset unit’s lackluster returns and reiterated CEO Jane Fraser’s earnings targets.
The wealth division aims to increase medium-term returns to above 20%, Sieg said, up from 4.6% in the first quarter. Costs were expected to drop in the short term, he added.
“Investors are and should be very disappointed with the returns in this sector and so I don’t think it should surprise anyone that we had to make significant changes within the team,” Sieg said in response to a question about the leadership changes. .
“We have had a substantial number of departures, but those departures have actually come from a level of rigorous corporate soul-searching,” he added.
Kris Bitterly was tapped to run Wealth at Work, a company that serves clients through their employers, according to a memo seen by Reuters.
Sieg also hired Keith Glenfield, with whom he worked closely at Merrill Lynch Wealth Management, to succeed Bitterly as head of investment solutions when she assumes her new role in September.
“It’s time for a laser-like focus on winning our clients’ investment assets” to go beyond their traditional banking and lending needs, Sieg wrote in the memo.
The lender estimates that customers have $5 trillion in assets invested with other banks or asset managers.
The wealth division poses the biggest challenge for Citi to improve operating performance and shift its mix of businesses to reduce reliance on lending, Bank of America analysts led by Ebrahim Poonawala wrote in a note last week.
“Management will have to make the case for how Citigroup can effectively compete with industry giants like UBS and HSBC compared to global banks and companies like Morgan Stanley, JPMorgan and Bank of America in the US,” Poonawala wrote.
If the turnaround is not successful, the bank may consider strategic alternatives for the division, he added.
Bitterly, who currently leads investment solutions, will succeed Joe Ryan, who leads the Wealth at Work business on an interim basis after Naz Vahid’s departure was announced last month.
Sieg has also hired Morgan Stanley’s Dawn Nordberg to lead integrated client engagement, the company announced last week. The new wealth function is aimed at boosting collaboration, including with the company’s banking arm led by Viswas Raghavan, which started earlier this month.
Investors have rewarded Fraser with a 17% rise in Citi’s share price this year after she delivered a major overhaul, surpassing the 11% gain for a broader S&P index of banking stocks.
Still, it faces significant challenges in keeping up with the competition, including regulatory issues, lackluster revenues and a workforce unsettled by thousands of layoffs.
