On September 10th 2020, Citigroup announced Jane Fraser is set to take over from current CEO Michael Corbat when he steps down in February 2021. This makes them the first big Wall Street bank to be run by a female CEO, a great achievement for the bank despite being long overdue. Corbat took to LinkedIn to describe the move as “a point of pride for all of us and ground breaking for our industry”, alongside many posts from other friends and colleagues showing support for Ms. Fraser’s appointment. With investment banking being one of the most male-dominated industries, this creates the question of how did Ms. Fraser achieve this great feat and what precedent does it set for the rest of the industry?
A perfect run
Ms. Fraser’s success in her career is widely recognised, there is no doubt that she is extremely qualified for a role as CEO and a perfect candidate for the job no matter her gender. Beginning her career at Goldman Sachs after graduating with a degree in Economics from the University of Cambridge, she had a promising future ahead of her. She is known for her relentless work ethic, the loyalty she inspires in colleagues and her gumption — which led her, in her 20s, to say she would only join McKinsey if she could work directly for its head of banking. Since joining Citigroup, every business unit she has joined has been greatly improved by the time she moved on. As head of Citi’s Latin America business, an area which was struggling prior to her arrival, Ms. Fraser increased net revenue and net profit by 8% and 38% respectively. With a CV that could rival that of any male CEO of a large bank, it is a shame the hysteria around her gender leaves little room for these achievements to shine – Ms. Fraser is an outstanding candidate by choice, and a role model for others.
Being reduced to one thing and one thing only — a woman — is an injustice to Ms. Fraser’s achievements, with many Wall Street women quietly raging against such treatment. Women in the industry want to be celebrated as powerful people, not powerful females. Ms. Fraser is endlessly praised for, and led to discuss in interviews, her ability to balance the complexities of being a mother whilst having a career in banking. As much as this balance is great to achieve, it is not all a successful woman should be praised for, they should be given the chance to discuss the complexities of their work — like any man in an interview would be. Arguably, true progress and equality will be achieved when women can have their competencies and skills judged against their male counterparts on a level playing field. During her career, Ms. Fraser has fully embraced her gender: mentoring other women, speaking publicly about the challenges she has faced and offering advice for overcoming them. In 2021, should women still have to be facing challenges their male colleagues are not? “Her sex should not matter, but her sex matters very much”, Laura Noonan, is a perfect summary of the dilemma when looking at gender issues within the industry.
This is a man’s industry
The investment banking industry is one of the worst in terms of its lack of female representation. During a congressional hearing in 2019, seven bank CEOs, including Michael Corbat, failed to raise their hand when asked whether they thought their likely successor would be a woman or a person of colour — not an optimistic exercise. Luckily, this seems to have changed for Corbat, but the same cannot be said of the other six CEOs. Women actually enter the banking and finance industry at a higher rate than men — 51% of entry level jobs are held by women. However, the percentage of women quickly dwindles when looking at higher ranks. Just 9% of the top 650 investment bankers in London are female and around 25% of total senior management roles are held by women.
But many in the industry have high hopes for the future of women in investment banking, particularly after Ms. Fraser’s appointment. Gina Miller, a prominent City campaigner and co-founder of SCM Direct (a boutique asset manager) stated, “once you have women at the top, the rest will follow very naturally”. Citigroup is seeking to increase female representation in its analyst programmes by up to 50%; in 2019, the bank’s full time analysts and associates were 45% women, up from 35% a year earlier. There has been progress made at the bank already. When Ms. Fraser will take over, half of the 16-member board will be female. This same figure was only three women at the last CEO handover eight years ago.
Despite this positivity, there is clearly a problem with retaining and promoting women in the industry if over half of those entering are women but we are only now seeing the first female CEO of a big bank. The average internal target for female senior managers is only 28% across the investment banking sector. This is the lowest across the financial industry: regulators and trade bodies are aiming for 40%, and asset managers and professional service firms are both targeting 33%. Increasing the amount of women at the top of these large banks is a slow process — a claim a lot of banks would be happy to hide behind. But setting low targets and failing to achieve them means the banks risk shooting themselves in the foot when trying to attract the brightest and best talent.
Not just a number
Banks need to recognise gender equality within their companies is not something they should simply be doing for a gold star, but increasing gender diversity (and diversity in general) is hugely beneficial for any business. Alexandra Morris, an investor, describes the responses she receives when asking management of companies how they treat their employees. On the one hand, men tend to give one-dimensional responses that highlight rigid evaluation processes, being lean, or keeping salary expenses low; failing to talk about non-financial aspects that have been proven to add long-term value, such as what it takes to attract and secure the best talent. Women, on the other hand, are more inclined to answer the same question with holistic responses about safety, flexibility, diversity and inclusion, competitive pay, and corporate social responsibility in the wider community — areas that are growing in importance for attracting the best people who will create future shareholder returns. It can’t be denied that rationalisation and efficiency are still important factors for consideration when looking at how a business is run, but it is the mix of outlook that can be brought about with increasing numbers of women at senior levels that will prove beneficial in the long-run. As Peter Drucker states in his famous quote, “culture eats strategy for breakfast”.
Will we see a female revolution?
The #MeToo movement led to a harsh re-examination of office workplace dynamics; institutional investors were demanding that boards of directors add more women; and companies — banks included — were preaching the merits of diversity. Citigroup has gained from a first mover advantage in getting the recognition for promoting a woman into its top role. However, in the last few years several of the largest Wall Street banks, such as JP Morgan Chase and Bank of America, have also positioned other senior women to potentially become their next CEO. But Citi got there first. A large-scale bank such as Citi having a female CEO carries a great resonance for other women knocking on the CEO door at their own companies — not just in the investment banking industry. Banks are evidently trying to move in the right direction, with some recruiters saying last year they were being offered a “diversity premium” of up to 20% of their fee in order to hire more senior women.
Also, the pandemic has provided a silver lining for women wishing to advance in the industry. Efforts to promote gender diversity have come under spotlight due to the pandemic dismantling previous prejudices on the value of working from home. This previous negative opinion was often a key obstacle for women as they climb the career ladder and also have children. So this provides a great opportunity for women to reach those higher roles and not be held back by wanting to have a family.
It is rather disappointing it has taken this long to be able to see articles about the first female CEO of a large Wall Street bank. Jane Fraser’s gender is not something she should be defined by, as her incredible career achievements show, but unfortunately it is the major focus of her appointment. The day when we see as many women as men being appointed as CEOs of large banks will be when we can see true gender equality in the industry. A day when gender no longer defines how we view a banker.