Citigroup CEO faces disgruntled workers, regulators’ demands in tough

Frustration has been building within parts of Citigroup over delayed bonuses and tight budgets, two impacts of the bank’s response to its regulatory oversight, according to people with direct knowledge of the situation.

Workers from junior salespeople to senior executives have been ensnared in monthslong reviews stemming from an anonymous complaint portal for employees, according to the sources. The bank freezes bonuses and performance reviews for staff under investigation, even if claims are baseless, according to the people, who asked for anonymity out of fear of reprisals.

The cumbersome internal reviews are a surprising fact of life at Citigroup, where CEO Jane Fraser has garnered headlines for talking about work-life balance and other ways to get a recruiting edge versus competitors. They illustrate how regulatory scrutiny has weighed on employee morale, making the already-difficult task of turning around Citigroup even harder as Fraser, 54, approaches her one-year anniversary leading the firm.

Fraser, the first female chief of a major U.S. bank, finds herself in a tricky balancing act: To overhaul a company that has deeply underperformed U.S. rivals for years, she has to improve returns and grow businesses while keeping a lid on expenses and plowing money into appeasing regulators.

Investors have been skeptical so far. While 2021 was the best year for the banking industry in more than two decades because of rising interest rates, Citigroup didn’t participate in the rally. Since Fraser took over in March 2021, the bank’s stock has climbed 2.7%, while Bank of America jumped 38% and Wells Fargo, also a turnaround project, rose 56% in that period.

Fraser, a former McKinsey partner who took over after predecessor Mike Corbat accelerated his retirement timeline, kicked off her tenure with a bang: In April, she announced that the bank was exiting 13 markets in Asia and Europe. The strategy was to simplify the bank and focus on its strengths in global corporate cash management and U.S. credit cards, and to grow in wealth management.

The exits, including the announcement last month that Citigroup was leaving retail banking in Mexico, were applauded by analysts, who saw it as a sign that Fraser would leave no stone unturned in her quest to remake Citigroup. After all, her predecessors had resisted calls to shrink the bank’s global footprint, and Fraser herself had managed some of the operations being pruned.

But while rival banks saw their stocks surge last year and fintech players like Block‘s Cash App gained millions of users, Citigroup struggled. The company’s revenue sagged 5% to $71.9 billion in 2021 while expenses jumped 9% to $48…