Cece Stewart on Leaving Citi, Battling Bank's 'Enormous Headwinds'

Cecilia "Cece" Stewart, the veteran retail banker who spent three years trying to turn around Citigroup's (NYSE:C) flagging U.S. consumer and commercial banking operations, is leaving the company next month.

Citi Chief Executive Michael Corbat announced Stewart's departure and several other senior management changes in an internal memo on Thursday. Stewart, who ran the retail bank operations for Wachovia and the private bank at Morgan Stanley (MS) before joining Citigroup in early 2011, will "retire at the end of April to focus her energy on her personal passions and service on several boards," Corbat wrote.

Those passions include her horses and her farm outside of Charlotte, N.C., where her elderly parents live and where Stewart returned most weekends during her tenure at Citigroup's New York headquarters, she said in an interview on Thursday.

"It was a very, very difficult choice," but "I'm going to be 56 in April, I've done this for 35 years, and I have had an amazing career," she said, adding that her departure from Citigroup "was 100% my decision."

Citigroup spokesman Mark Costiglio declined to comment beyond Corbat's memo. Stewart's future at the company had become something of a public question in the past year, after The Wall Street Journal reported that she was facing increased pressure to deliver better results.

That would be a difficult mandate at most retail banks in the current economy, as interest rates and the resulting margins banks can earn on their deposit customers remain low, and more banks try to compete for the affluent customers that Citigroup considers its target audience. But it has been an especially monumental task at Citigroup since the financial crisis, which saw the bank barely saved from failure by the grace of three government bailouts. Then-CEO Vikram Pandit led Citi into a massive turnaround effort, which involved selling off many of its operations and shrinking others, including its already-small branch network and its ungainly hybrid of high-class banking services and mass-market, or even subprime, lending operations.

Pandit's thwarted bid for Wachovia in 2008 would have given Citigroup the coast-to-coast branch coverage that would have let it compete with rivals like JPMorgan Chase (JPM) and Bank of America (BAC) — and probably would have made Stewart's current job much easier, or at least similar to the job she was then doing for Wachovia. But Wells Fargo (WFC) swooped in with a winning offer for that bank, effectively torpedoing Citigroup's chances of ever significantly expanding its retail branch network.

Since then, Citi has struggled to articulate a retail bank strategy or to successfully install a long-term head of those operations. Former retail bank chief Terri Dial resigned in 2010, after two difficult postcrisis years.

Stewart's own efforts have yielded uneven results; in the interview Thursday, she cited her unit's deposit and checking account growth, improved banker productivity, better branch cross-selling of credit cards and turnaround of its wealth management business since Citigroup sold its stake of the Smith Barney brokerage to Morgan Stanley. But those strides have yet to consistently turn the tide of Citigroup's retail-bank numbers; in January, the bank reported that both revenues and profits for its North American consumer businesses fell 8% from a year earlier.

"I have an amazing team at Citi, and I think we've made a significant difference," Stewart said. "Have we been able to make up all the rate compression? No. …We face enormous headwinds, as all of our peers do."

She praised her successor, mortgages chief Jane Fraser ("an amazing, terrific leader"); her boss, Citi Co-President Manuel Medina-Mora ("incredibly gracious and supportive"); and Corbat, who has "created a culture of accountability" that Citigroup has been criticized for lacking in the past. (It's an ongoing struggle for Citi, which last week disclosed that it had found evidence of fraud in its Mexican unit.)

Stewart says she is not interested in looking for another full-time job anytime soon.

"I made this as a life-choice change, so I would not be interested in another financial services top executive job anytime in the near future. It's not even on my radar," she said. "The next places you're going to see me are going to be in the competitive show ring on my horses."

Stewart, 55, was one of the most senior women in the almost-exclusively male senior ranks of Citigroup executives. In October, American Banker Magazine named her No. 7 on its annual list of the "Most Powerful Women in Banking." She said Thursday that she worried that her decision to retire would "send an unintentional message" to other women at Citi, but "I'm being replaced by a very senior, very talented woman."

Ironically, her departure is part of a reorganization that will actually improve the gender imbalance at the top of the country's third-largest bank. Besides appointing Fraser to replace Stewart, Corbat also promoted Barbara Desoer to become CEO of its Citibank, N.A., unit.

Bill Mills, head of Citigroup's North American operations, is also taking on responsibility for the bank's Japanese franchise and the Citi Holdings unit where the bank houses operations it plans to sell or shut down, Corbat wrote.

Fraser will continue to run Citi's global mortgages operations while taking on responsibility for its U.S. consumer and commercial banking. Like Stewart, she will report to Manuel Medina-Mora, who runs those businesses globally and is Citigroup's co-president.

Corbat's memo praised Fraser, who took over Citi's mortgages team less than a year ago, for "strengthening talent, driving operating performance, enhancing connectivity and improving the customer experience."

Desoer, a longtime Bank of America (BAC) executive who was once considered to be in the running for that bank's CEO job, joined Citigroup in October, when she was named chief operating officer of the Citibank unit run by Gene McQuade. She will replace McQuade on April 1 and will report directly to Corbat — becoming one of the only women executives to do so since he became CEO in October 2012.

McQuade is also retiring — but unlike Stewart, he will likely remain with the bank as a part of its board of directors. "In a sign of our institution's respect for him and the value we place on his governance and banking experience, Gene has been nominated for a seat" on the board and will stand for election in April, Corbat wrote.

While Corbat also mentioned Stewart's "similarly distinguished career in our industry spanning 35 years," his other praise for her was somewhat more muted: "Over the past three years, she helped transform the business into a customer-centric franchise," Corbat wrote, citing her "strong leadership team" and her improvements to "the efficiency and performance" of Citi's branch network.

"I know I speak for all of us when I say we have a deep sense of gratitude for what Cece has accomplished. She will be missed," he added.