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Fraser, the CEO of Citigroup, has been fought to sell his turnaround plan to investors

Fraser, the CEO of Citigroup, has been fought to sell his turnaround plan to investors

NEW YORK, January 14 (Reuters) - Despite overseeing a radical reorganization in less than a year at the helm, Citigroup Inc's chief executive Jane Fraser is struggling to convince skeptical analysts and investors that she can turn the bank around.

In February 2021, Fraser took over as the chairman of the Wall Street bank, tasked with transforming a business whose share price had lagged competitors like JPMorgan Chase & Co and Bank of America.

Since her appointment, she has sought to simplify the business, overseeing its most comprehensive overhaul since the financial crisis in 2007. The bank announced plans to exit non-core businesses, including consumer franchises, in 13 markets across Asia, Europe, the Middle East, and Africa last April.

On Tuesday, the bank doubled, declaring that it intends to sell or spin-off its Mexican consumer business, which Fraser had led the bank's Latin American business before becoming the CEO.

The bank is still expanding its operations on Thursday, with its consumer companies in Indonesia, Malaysia, Thailand, and Vietnam being sold.

Fraser's initial suggestions that the bank's Asian consumer franchises would succeed was perhaps her boldest move ever in reshaping the bank.

Mark Mason, a CFO for Citi, said on Friday that the decision to quit the business was driven by the bank's strategy to focus on its institutional business. Although the Mexican consumer business had delivered good returns, it would be more valuable to another owner.

Citigroup's share price has remained stable, but investors are still uncertain whether Fraser's plans will rely on it anytime soon.

"It is a show-me situation," says Odeon Capital's analyst. "This company has been mischaracterized, mismanaged, and poorly handled by one administration after the other for 25 years," he said.

Since Fraser took charge last February, its stocks have increased by 3%, compared to JPMorgan's with Bank of America's with 40%, and Wells Fargo's rise by 55%.

On Friday, the stock was under further pressure, down 2.3 percent after Citi reveals its earnings with a 26% drop in profit.

Citi's conference call on the direction of the bank was asked by analysts, elucidating that she wanted it to be "the preeminent bank for institutions with cross-border concerns," and that it was focused on increasing shareholder value.

Fraser is less than a year into her mission to change the bank's fortunes around, and investors who support her strategy say it will take time for the changes to improve the bank's performance.

Corbat had opted to avoid the use of dozens of non-core companies before giving the reins to Fraser.

Sandy Weill led the bank from 1998 to 2003 while Weill led the bank through a acquisition spree before the collapse and the government's bailout.

Bove cited the failed policies of six previous CEOs before saying that Fraser's plans aren't enough to attract investors.

The bank lags the financial performance of its peers regularly and has been under pressure from regulators for many of the years since its bailout during the financial crisis.

Citigroup's stock surged and remained steady for months as Corbat was incorporated in place of Vikram Pandit.

Corbat agreed in September 2020 to take over the position of Fraser by the end of February 2021. At the time the bank faced more uncertainty about its financial controls, including whether it should have paid nearly $1 billion to trustees of bonds.

Fraser's strategy is to simplify the business, improve its focus on its institutional operations, and improve its capital allocation.

"The new Citi is a simpler business that has a greater focus on developing global banking, payments, and investment services, according to Wells Fargo analyst Mike Mayo, who has a "overweight" rating on the stock.

The stock has been not yet recovered by the plan.

Bove, who applauds Fraser's moves so far and recommends the stocks, blames the poor share performance on "investor evaporation."

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