00:00Citi Investment Banking head Viz Raghavan has emerged as a potential candidate to succeed the current CEO, Jane Frazier.
00:07Raghavan has energized the division since his arrival last year, with the bank scaling the M&A advisory ranking and displacing rivals on recent deals.
00:18And this is something I think that a lot of investors and also probably viewers who work at Citi are very interested in, Dani.
00:25Definitely. Assuming the ones on his floor are currently watching, let's stay on that story.
00:29We bring in Bloomberg's chief Wall Street correspondent, Sri Nataraja.
00:32And Sri, it's also interesting that this is an individual who came from J.P. Morgan as well, somewhere that's had maybe some issue keeping top talent because of succession planning.
00:42What do we know about him and the likelihood that he would be a successor to Jane Frazier?
00:45Well, let's start with the three most important factoids about him.
00:48Viz Raghavan is a cricket fanatic, which puts him high up in my list.
00:52Of course, a necessary quality.
00:54Has a fondness for Italian ties and has purchased a penthouse in New York that was previously rented by Bad Bunny.
01:00So let's get those three important facts out of the way.
01:03Now, Viz Raghavan has come to Citigroup at a very important moment.
01:07The bank has been struggling.
01:09End of 2023 was perhaps the low point of Citigroup.
01:12Shortly after that, CEO Jane Frazier had to come out and announce this massive restructuring that involved cutting 20,000 jobs.
01:18But about two years into this process, there are clear signs of turnaround.
01:23Citigroup is the best performing big U.S. bank stock this year.
01:27That's important.
01:28Even on the investment banking side, the very particular mandate that Viz Raghavan has has shown signs of improvement.
01:37It has already gone ahead of Bank of America for the full year numbers.
01:40If you were to look at financial advisory fee, analysts are estimating that Citigroup will finish number four.
01:45But really, this is not about the number four and number five spot.
01:49For Viz Raghavan to be really successful, he has to be able to prove to Citigroup's management, to its board, to its CEO,
01:55that he can lift this bank into the top three.
01:57And that's going to be a very difficult challenge because the Goldman Sachs, J.P. Morgan and Morgan Stanley,
02:03that trio has a really solid advantage.
02:06So the task ahead is difficult, but there have been early signs that sound very promising for Citigroup.
02:12What works to Citigroup's advantage?
02:14I mean, they must be one of the most international banks out there.
02:18They are one of the most international banks.
02:19They're, of course, paring back some of what they believe are not core to them.
02:23Operations that are not core to their mission, cutting back on some of their international banking operations, per se,
02:29but focusing more on the commercial banking side, right?
02:32Focusing on this wealth management and commercial investment bank side and saying,
02:36if we can focus on this, lift our return on equities, which, you know, for this year, perhaps,
02:41is still in the single digits, they need to be much better than that.
02:44But they're slowly working towards that.
02:47And if Jane Frazier's turnaround continues on this track, analysts will be happy with where they are headed,
02:53not necessarily where they are right now.
02:55Can I ask you just about, like, succession planning?
02:57One of the things I never fully understand is you have this person coming in who's done a great job for the bank
03:01and saying maybe a potential successor to Jane Frazier.
03:03I think they're literally the same exact age.
03:07So how would that work if you have two people who are a person who's a rising star,
03:11but she's not necessarily going to leave anytime soon?
03:13I'll one-up you on that.
03:14Not just almost literally the same age.
03:16I think Viz Raghavan is about six months older than Jane Frazier.
03:19So most certainly the biological clock is not favoring him.
03:22Also, don't forget the fact that Jane Frazier is about four years into her tenure as the CEO.
03:27And while the average tenure on the S&P 500 tends to be about six to seven to eight years for CEOs,
03:33that's not necessarily the case in the banking world, especially when the CEOs had a good run.
03:38So if Jane Frazier can continue this Citigroup turnaround story,
03:42there is no reason she would have to leave in the next year or two or three.
03:45And if that's the case, then yes, it becomes harder to see how Viz Raghavan becomes the next CEO.
03:52The counterpoint to that is 60 is the new 50.
03:55Right. Well, and she still is underperforming Jane Frazier.
03:59I mean, there's no bank on Wall Street that's done worse over the past five years other than Bank America.
04:05And to that, she will say there's no bank on Wall Street that's done better than Citigroup in the last year.
04:10And that's important.
04:11Well, one year, right?
04:13I'd take a longer term as an investor.
04:15I would take a longer term view probably as an employee.
04:17So see where the story is headed, not where it is right now is what Citigroup is going to tell you.
04:21All right.
04:21Sri Nadarajan, go where the puck is going.
04:24He is Bloomberg's Wall Street, chief Wall Street correspondent covering this story for us.
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