November 28, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Citi investment bank head Paco Ybarra to leave after 36 years at lender

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Paco Ybarra, Citigroup’s investment banking head and leader of the bank’s biggest business unit, is to leave the company in the most significant management departure since Jane Fraser became chief executive more than two years ago.

Ybarra, a 36-year veteran of Citi, joined the bank as a junior manager in Madrid before climbing the ladder to become head of debt trading. In 2019, Citi’s then-chief executive Michael Corbat named him as head of Citi’s large institutional client group, which also includes the bank’s transaction services business.

Ybarra, 61, said the decision to leave was his own and followed a period of discussion with Fraser. He said they had recently come to the conclusion that it was the right time for him to move on.

“This is my retirement from Citi, but I don’t plan to disappear,” Ybarra told the Financial Times. “I don’t think I am just going to play golf, but I don’t know what is next.”

Insiders say Ybarra has played an outsize role at Citi via his position as head of the investment bank. The unit he oversees generated more than half of Citi’s $40.9bn first-half revenue in 2023, and includes the transaction services business that is growing quickly and is one of the bank’s new focal points. Of Citi’s five main business heads, in the current structure, three reported up through Ybarra.

For the past few years, Ybarra has also been one of Citi’s top paid employees. He was awarded $22.6mn in cash and stock grants last year, only $2mn shy of Fraser’s $24.5mn comp package. Earlier this year, though, Citi said it would withhold some of his 2022 pay after the bank, along with its rivals, agreed to pay hundreds of millions of dollars to settle allegations that employees were using WhatsApp and other unauthorised messaging services.

Ybarra’s exit comes shortly after Citi announced a number of senior management changes, and as Fraser seeks to restructure the bank in an effort to find a mix of businesses that will produce consistent returns.

Citi’s profits fell in the second quarter and, along with Goldman Sachs, it was one of the few large US banks that reported a decline in year-on-year profits for the period.

Citi has not named a replacement for Ybarra, and has not said if it will. The move could allow Fraser to streamline upper management, something she has signalled she would like to do, potentially removing a layer between her and a number of Citi’s critical business units.

Ybarra will stay with the bank to help with the transition and plans to leave at some point in the first half of next year.

“I think we have done a very good job in executing on our strategy to simplify and focus the business on key areas,” Ybarra told the FT. “I am sticking around to be part of those discussions about the future leadership of Citi’s institutional business but I don’t know what the result of that will be.”

Fraser announced the departure internally on Thursday in a memo to employees, which was seen by the FT. Fraser said in the memo that no decision had been made on what the new leadership of Citi’s large commercial client business would be, or how it would be structured.

“I expect that we’ll complete our assessment and be in a position to share decisions with you in the coming months,” Fraser wrote. “In the meantime, I know Paco and his leadership team will remain fully focused on delivering our priorities and serving our clients with excellence.”

Of Ybarra, Fraser said, “Those of us who have the privilege of working with Paco admire his humbleness, curiosity and incredibly sharp instincts. Personally, I deeply value his counsel and partnership, especially during my early days as CEO as we worked to develop a bold vision for Citi.”

Ybarra at times has clashed with Fraser, most notably over the chief executive’s embrace of remote work during and after the coronavirus pandemic. Fraser has pushed for Citigroup to accommodate employees who want to stay on a hybrid work schedule. Ybarra in a May 2020 interview told the FT he thought the bank would suffer from employees being allowed to work from home.

More recently, insiders have said the relationship between the two executives has improved, and that they have bonded over the fact that they both speak Spanish. Fraser lived in Latin America for five years when she ran Citi’s business there.

Additional reporting by Joshua Franklin and Arash Massoudi