Jane Fraser, the new head of Citigroup's U.S. consumer and commercial unit, has promoted William Howle to run its U.S. retail bank.

It's a savvy move by Fraser, who is replacing the retiring Cecilia "Cece" Stewart. Howle, who has been running Citi's U.S. commercial bank, is a longtime Stewart lieutenant. He worked for her at Wachovia and Morgan Stanley, and followed her to Citi in early 2011, when she took over the third-largest bank's consumer and commercial operations.

Stewart surprised industry observers somewhat when she announced her retirement from banking last month. Howle, 48, told American Banker a week later that he planned to stay with Citi, and had told Fraser that he was "all in."

Howle's role is a new one at Citigroup, and gives him responsibility for "the core segments, functions and products needed to serve the retail client base," according to a memo Fraser sent to employees this week. He will report directly to Fraser, with a "matrix responsibility" to Jonathan Larsen, Citi's global head of retail banking. He will also oversee the U.S. commercial bank on an interim basis until Fraser and global commercial bank head Sunil Garg name a successor.

"Will brings continuity of direction and strategy to our retail business, together with the breadth and depth of experience needed to lead and grow this critical franchise," Fraser said in the memo.

Howle has helped oversee some of Citigroup's recent efforts to rethink its consumer operations, in part by reorganizing its traditional branch network. The bank is planning to shrink the sizes and staffing of many of its physical locations, starting later this year in Miami, Howle told American Banker last month.

His promotion also makes organizational sense for Fraser, who will continue to oversee Citigroup's U.S. mortgage operations as she takes over consumer and commercial banking. Still, she and Howle confront a retail banking environment that has challenged Citigroup and most of its competitors ever since the financial crisis. Low interest rates and compressed margins — not to mention increased competition and regulation — have reduced the profits that banks can make from their traditional businesses of taking deposits and lending to customers.

Citigroup, which is due to report first-quarter results next week, also has some individual challenges to overcome. The bank, which has spent the past five years trying to recover from almost failing during the financial crisis, got an unexpectedly bad report card on that recovery last month, when the Federal Reserve rejected Citigroup's request to increase its shareholder dividends and stock buybacks.

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