Citigroup bets on ex-BofA exec Andy Sieg’s connections to revamp wealth unit

By Lananh Nguyen and Saeed Azhar

NEW YORK (Reuters) – Citigroup Inc’s hiring of Andy Sieg, the incoming head of its wealth management unit, underscores the lender’s ambitions in the business as well as the uphill climb it faces in gaining share in a competitive market.

The 55-year-old executive, known for crisscrossing the country to visit clients and financial advisers, is tasked with revamping a unit where revenue fell 2% to $7.4 billion last year. That makes the business less than half the size of Bank of America Corp’s Merrill Wealth Management arm, the $18-billion behemoth Sieg ran until he left last month.

“It is a super competitive industry,” said Eric Compton, an equity strategist at Morningstar. “It is simply very hard to take share. Another challenge is that Citi has historically been undersized and a bit of a laggard in the space…especially in the wealth business where it’s all about existing relationships.”

Citi is making a bet on Sieg’s connections.

“We’re obviously delighted that Andy is joining,” CEO Jane Fraser told analysts on the bank’s first quarter earnings call on Friday, citing his track record, leadership and knowledge of financial products and digital adoption.

“We’ll certainly be taking full advantage of his expertise and experience in the U.S.”

The hiring emerged as a highlight of Citi’s post-earnings conference call, with several analysts asking about the executive and the bank’s plans for wealth management. The bank wants to build better relationships with wealthy people whose businesses are already commercial clients, Fraser said. 

Sieg will aim to compete with companies that have spent years beefing up in wealth. Citi is recruiting new client advisers at the unit, CFO Mark Mason said, adding to the current level of about 3,000.

The bank declined to comment beyond its executives’ remarks on the conference call. Sieg declined to comment.

Wall Street firms cater to ultra-wealthy clients by providing services like brokerage, mortgages, estate and tax planning. Those activities generate more stable revenues than volatile Wall Street operations, such as investment banking and trading, which are strongly linked to economic activity.

In some ways, Citigroup is playing catchup after selling its old wealth business, Smith Barney, a decade ago to Morgan Stanley, which then leaned heavily into wealth management.

That bet paid off – Morgan Stanley’s wealth unit, led by Andy Saperstein, brought in record revenue last year. And CEO James Gorman has set an ambitious goal of reaching $10 trillion in client assets in several years.

Bank of America will report its earnings on Tuesday, followed a day later by Morgan Stanley.

Two years ago, Citigroup unified its various wealth businesses into a single organization led by Jim O’Donnell that included its private bank and personal wealth division. While Sieg is on required leave for contractual reasons, O’Donnell will remain in the role and then become executive vice chairman. Sieg assumes his new role in September.

Citi’s wealth division oversees about $750 billion in client assets, with a strong footprint in Asia, compared with Merrill’s $1.4 trillion in assets under management.

Sieg previously led 25,000 employees, nicknamed the “thundering herd,” after Merrill’s famous bull logo. He joined Merrill Lynch in 1992 and had been its president since 2017, with a four-year break during which he worked in Citi’s wealth group from until 2009.

Merrill’s revenue grew about 18% to $18.1 billion last year, compared with $15.3 billion at the end of 2017, according to Bank of America filings.

(Reporting by Lananh Nguyen and Saeed Azhar, editing by Deepa Babington)