Meet the executive tasked with Citi’s hardest challenge: getting the bank’s house in order

In March 2023, Citigroup CEO Jane Fraser anointed Anand Selva, as the bank’s chief operating officer. His mandate: oversee a deeply unsexy yet crucial initiative to regain compliance with regulators. At the time, she praised his “long track record of delivering results.”

So far, Selva’s tenure has been rocky.

In July, two regulators fined Citi $135.6 million for failing to make enough progress in fixing its data-management issues. The bank had agreed in 2020 to work on this problem and others, including poor risk controls, after paying $400 million in fines to the Federal Reserve and the Office of the Comptroller of the Currency. The OCC said in July that the bank had made “meaningful progress overall” but that the agency wanted to ensure Citi allocated enough resources to address the “persistent weaknesses” regarding data.

These new fines are despite Citi dedicating massive resources to a firmwide initiative to overhaul the bank’s technology. This program, called the “Transformation” and overseen by Selva, has about 13,000 employees. Citi spent $7.4 billion on the endeavor from 2021 through 2023. This year’s budget has been increased by $250 million, to more than $3 billion.

The pressure is on, with Sen. Elizabeth Warren urging the OCC to “impose growth restrictions” on Citi, arguing that it has grown “too big to manage.” The regulator and Citi declined to comment.

“We’ve always said that progress wouldn’t be linear,” Fraser said after the latest fines, “and we have no doubt that we will be successful in getting our firm where it needs to be in terms of our Transformation.”

For Selva, leading the Transformation is unlike any test he has faced in his three-decade career at Citi. Selva, who goes by the shortened version of his last name, Selvakesari, joined Citi as an assistant operations manager in Chennai, India, in 1991. He rose through the ranks in Asia before taking over the US consumer bank in 2019. When Fraser was made CEO in 2021, she chose Selva, who’s now 57, to replace her as the global head of consumer banking.

In his current role, his mandate is to make the bank safer, not to turn a profit. To do so, he has to solve for Citi’s decades of underinvestment in its infrastructure, which affects every business line of the bank.

Business Insider talked to 14 current and former Citi employees who have worked under Selva to get a picture of the challenge facing him and why he was put in charge of the bank’s No. 1 priority. All but two spoke on the condition of anonymity, citing fear of reprisal or the sensitivity of regulatory matters.

The Transformation is about really repiping the machine.
Gonzalo Luchetti, head of US personal banking

Three senior executives pointed to his experience navigating regulation and working with technology from running Citi’s consumer bank. Gonzalo Luchetti, Selva’s successor as the head of the US consumer business, told BI that serving 70 million customers required handling tremendous operational risk.

“If we mess it up, usually you don’t mess it up for one; you mess it up for hundreds of thousands, if not millions,” he said. “You have to be super good at process orientation and making sure that there’s high discipline and rigor.”

Luchetti also emphasized Selva’s longevity at Citi and experience across regions.

“He knows the fabric of the firm very well,” Luchetti said. “The Transformation is about really repiping the machine. He’s touched a lot of the machine himself.”

But touching the machine isn’t the same as fixing it. Eight employees told BI that they were surprised that Selva was made the head of the Transformation given that he had never held a leadership role in technology or compliance. They described Citi’s culture as a cliquey environment that rewards managing up over results, noting that the COO promotion followed dismal performance for the wealth unit he oversaw.

“The biggest job was given to a guy who with 1 ½ years in wealth wasn’t able to do anything,” a former managing director said.

Selva has also come under scrutiny for a lawsuit filed against him and the bank by an ex-Transformation executive in May. Kathleen Martin, a former interim data chair, alleged that Selva pressured her to hide information from the OCC that would make Citi “look bad” and that she was fired in September 2023 after multiple refusals. Citi denied the accusations and filed a counterclaim in late August, alleging that Martin was fired for underperformance.

They just have to get it done.
Mike Mayo, a Wells Fargo analyst

Citi has recently made leadership changes to Selva’s unit. The bank tapped its new tech head, Tim Ryan, to lead the data effort alongside Selva and take over management of the 800-employee data team. The work on data, along with risks and controls, is paramount to the Transformation.

Splitting the burden may expedite the massive task, which requires coordinating work from employees across the entire bank. Citi declined to specify a timeline, citing the confidential nature of regulatory matters. A managing director in the Transformation estimated that the work required would take about two decades.

Mike Mayo, a Wells Fargo analyst, said that until Citi meets the requirements of the OCC and the Federal Reserve, the bank is in “regulatory purgatory.”

“Citi has thrown over 10,000 people and $3 billion and more at this problem,” Mayo told BI in July. “They just have to get it done.”

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Selva does have a long track record at Citi. Born in Madurai, a large city in southern India, he studied engineering and played basketball at the Coimbatore Institute of Technology. He earned his master’s in business administration at Madurai Kamaraj University before joining Citi in 1991.

Selva made his name at Citi by shaping its consumer-bank businesses across Asia. He led retail banking in China and India before taking over the Asia Pacific market in 2015. His approach was digital-first, eschewing branches for banking apps. Despite closing 60% of bank branches in Asia from 2016 through 2018, Selva grew deposits by 10%.

The wealth business’ revenue dropped by 6% year over year at the end of 2022. Fraser called the division’s performance “disappointing.” O’Donnell’s reign over wealth was cut short in January 2023, and it was later placed under Andy Sieg, the former head of Merrill Wealth Management. With Citi on a campaign to divest itself of 14 international consumer-bank markets, Selva’s remit shrank.

His appointment as COO thrust him into the spotlight. Tidalgo told BI that he was no stranger to the task of dealing with regulators.

“When you are the head of a country, you are the face of Citi to the regulators. Good, bad, or indifferent, you have to face them,” she said. “That’s part of the job.”

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Citi’s Transformation and its challenges predate Selva’s appointment as COO. It existed as a firmwide initiative before the October 2020 fines but was kicked into overdrive after Citi entered consent orders with the OCC and the Federal Reserve.

It can be viewed as two parts. The most visible is the strategy to simplify and modernize the bank, such as divesting Asian consumer businesses, removing five layers of management, and reorganizing so that the five business lines report directly to Fraser.

The second part is meant to address the 2020 consent orders. The initiative is separated into seven programs, including finance, compliance, and risk and controls. While some 13,000 employees are dedicated to the Transformation, much of this work is carried out by employees across the bank.

The challenge with the Transformation role is you are accountable yet not responsible.
a managing director in the Transformation

Selva sits at the center, coordinating these efforts. He’s in a tough position, as much of the Transformation’s work is executed by employees in other divisions.

“The challenge with the Transformation role is you are accountable yet not responsible,” the managing director in the Transformation said. “The role is really coordinating and getting others to do what they need to do, which is very different from running a business where the entire team follows your lead, you own it, you have the ability to actually get them to do this stuff.”

When everyone is accountable, effectively no one is, a former senior vice president in the Transformation said. Matters got stuck in bureaucracy, bouncing from one department to another and being debated in committee for months.

A senior executive in the Transformation acknowledged that the programs often rely on each other’s work. For example, a delay in data work can lead to one for a finance project.

“When we are asked sometimes why it is challenging to execute on the Transformation, one of the challenges is the interconnectivity of those seven works,” she said.

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The senior executive said the Transformation’s successes had been overlooked, partly because the bank is limited in what it can say on regulatory matters. For instance, Citi has retired or replaced a quarter of its applications, halfway to its overall goal. The bank declined to specify the number of existing or terminated applications, but as of July, it had retired nearly 300 applications this year. The senior executive also touted the bank’s streamlining its risk-management workflow.

But the Transformation has earned a middling grade from Citi itself. The bank evaluates the initiative’s success for the purposes of a bonus program applicable to about 200 senior employees, including Selva. In 2022, an internal committee gave it a score of 94%, citing targets it met, such as submitting remediation plans to regulators.

For 2023, the score sank to 80%, calculated by measuring the timeliness of executing scheduled work, the percentage of work deemed complete by the bank’s internal auditors, and a “qualitative consideration of Citi’s cultural change” derived from the bank’s employee surveys.

Regulators placing an asset cap on Citi, as Senator Warren has requested, isn’t out of the realm of possibility, said Timothy Coffey, an analyst with Janney Montgomery Scott.

“At what point do the regulators just get fed up with Citi’s inability to adequately resolve these issues or stick to the timeline that they’ve laid out?” he said. “That’s an open-ended question.”

But the consent orders and the lack of progress are distractions in themselves. When Fraser took over Citi nearly four years ago, she said the Transformation was her No. 1 priority and asked for patience. Now her requests for time are wearing thin. Regardless of who leads the Transformation, Fraser is still accountable.

“This stays out here in terms of headline risk, and I think it puts a cap on the valuation that Citi can achieve,” said Stephen Biggar, an Argus Research analyst. “It’s an overhang on the stock. It’s an overhang on the reputation of Fraser.”

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