Citigroup Inc. was preparing to declare its wealth business a key piece of the bank’s growth strategy, but behind the scenes technology kept stirring up trouble.
Ultra-rich clients complained about outdated platforms that didn’t stack up against competitors, and relationship bankers privately agreed.
Again and again, a pair of Dallas-based tech executives sought to assuage those concerns, flying to New York to give presentations on how much they were going to achieve with two years and more than $1 billion.
But to the annoyance of senior managers, little was delivered.
In the midst of that dysfunction, Chief Executive Officer Jane Fraser resorted to the rare step of recruiting a top executive from outside the bank, assigning him to lead a newly independent wealth division and report directly to her.
A year after his arrival, Andy Sieg — a tall Pennsylvania native who ran Bank of America Corp.’s Merrill Lynch wealth brokerage — has since fired managers, filled senior posts with external hires, pressed clients to bring in more of their wallets and renewed the push to upgrade tech.
This year, his team also greenlit special retention bonuses for dozens of personnel, trying to stanch departures during the turnaround. Recent results, he said in an interview, show it’s starting to take hold.
“This is a growth strategy — make no mistake,” Sieg, 57, said in an interview. Before his appointment, “there wasn’t a unified wealth strategy, there wasn’t necessarily an operating philosophy about what we were trying to get done.”
One senior executive in another part of Citigroup compared Sieg to the arrival of cavalry in battle, suggesting he has a more sophisticated vision than predecessors.
It was an unusual move: a jump from one of the country’s largest wealth franchises to an industry laggard.
Citigroup’s wealth business has trailed behind its main banking rivals since the aftermath of the 2008 financial crisis, when it agreed to sell its Smith Barney retail brokerage to Morgan Stanley, now the leader among big U.S. banks.
Sieg first met Fraser for breakfast at Citi’s headquarters less than a month before handing in his notice to Bank of America in early 2023. Since arriving, he has taken stock and publicly claimed his new franchise has the potential to become the best in the world.
“I came into this role with eyes wide open about where the business was and with the utmost confidence in our ability to make this business successful,” he said. “I’m even more optimistic today than the day I started.”
His mission is key to Fraser’s own legacy. She’s running the only major Wall Street bank whose stock trades below where it was five years ago.
To grow revenue, she wants Citigroup to leverage its relationships with corporations around the world, handling more of their cashflows and deals, while helping their founders and executives tend to their burgeoning wealth.
Fraser has set an ambitious target for wealth — a three-part division that includes the private bank she once ran.
The goal is to produce a return on tangible common equity, a metric of profitability, of 15% to 20% by the end of 2026. That would be a big lift, up from 8.5% in the third quarter.
On her third-quarter earnings call with analysts in October, Fraser touted rising client assets at the bank and said she was excited by “the sheer potential of our franchise.”
It’s a ferociously competitive moment for talent and clients in the wealth industry.
Virtually all of Citigroup’s main U.S. rivals are investing heavily. In September, Goldman Sachs Group Inc. CEO David Solomon said the main constraint on his wealth business was being able to hire enough advisors.
“Wealth is a battleground,” said Wells Fargo & Co. bank analyst Mike Mayo, adding Citigroup’s returns have been “abominable” compared with rivals in recent years. “It’s only getting harder for Citi at a time when they’ve already fallen short.”
Sieg held more than 350 client meetings since joining the bank last October, dropping into Hong Kong, Riyadh, Paris, Florence and elsewhere. He also set up a 26-member advisory board of executives from around the world so that they can move faster on honing strategy and tackling problems.
Citigroup has an edge over U.S. rivals in reaching entrepreneurs and billionaires in Asia, where it has more reach. Already, about half of the division’s revenue is from outside of the U.S. — predominantly Asia and Australia.
One of Sieg’s top initiatives is persuading the private bank’s clients to shift more of their investment assets to the firm.
That includes drawing a harder line on those wealthy enough to qualify for the top tiers of service but who keep much of their wallets elsewhere, according to a person familiar with the matter.
They may end up getting their perks downgraded as they’re potentially shifted to another segment of the business.
At the same time, the bank has slashed how long it takes to set up accounts to days from weeks. When some colleagues mentioned they were having trouble with DocuSign Inc., Sieg spoke with its CEO. The software was soon updated.
