When Jane Fraser took over as chief executive of Citigroup (C 1.20%) earlier this year, she vowed to correct long-standing deficiencies at the bank and boost returns through what she called a "strategy refresh." She hasn't wasted much time. So far, Fraser has announced that Citigroup will exit 13 global consumer banking franchises that don't have the scale to compete, and focus more on global wealth management. Fraser and her team have also said they plan to double down on existing businesses that already put up strong returns, like investment banking.

Fraser has only been in charge for about six months, but there is already evidence that the refresh is moving forward. Here are two moves that show the bank's progress.

1. Selling Australia

In early August, Citigroup announced it was selling its Australian consumer banking franchise to National Australia Bank. The segment includes roughly $9 billion of deposits and $12.2 billion of loans consisting of $7.9 billion in residential mortgages and $4.3 billion in unsecured loans. The Australian banking franchise was one of the 13 markets Citigroup had pledged to exit, largely because they were inefficient and didn't have the scale to compete. Australia is certainly one of the largest units slated for sale, if not the very largest, accounting for $12 billion of those markets' combined $82 billion in assets.

Interior of a Citibank branch.

Image source: Citigroup.

National Australia paid $885 million up front, which is based on the net assets of the unit at completion plus a premium of $184 million, and is equivalent to 1.25 times the unit's book value, according to National Australia. That premium is certainly nothing special, but as one analyst pointed out on Citigroup's first-quarter earnings call, "Those [13 markets] were capital hogs. So I can't imagine the returns were very good."

What's more important is that Citigroup is making progress in simplifying its sprawling business. The bank is also getting capital that it can use to invest in its strategy refresh -- or share repurchases, which would be quite advantageous right now when you consider Citigroup's low valuation. At Monday's prices, its stock was trading for a little less than tangible book value (which is a bank's total equity minus its intangible assets, like goodwill).

2. Growing key businesses

Another part of the refresh that has started to play out is the further investment of businesses where Citigroup is a leader, such as securities services, investment banking, and treasury and trade solutions, or TTS. In particular, the bank appears to have made some notable moves in TTS, which analysts and investors have said they want to see more of.

The TTS division is part of Citigroup's larger institutional clients group, helping businesses all over the world run their operations. TTS helps clients carry out import and export operations, manage liquidity, and process payments, using analytics to help them run more efficiently. The TTS group operates in 160 countries and 140 currencies, and processes roughly $3 trillion in daily transactions. In 2020, TTS generated more than $9.5 billion of revenue for Citigroup.

In July, Citigroup launched its Citi Digital Account for its Latin American customers, enabling institutional clients to completely digitize their banking operations and do away with manual functions like wet-signed signature cards and checkbooks. The Citi Digital Account can be integrated with Citigroup's digital banking platforms and is now offered in Brazil, Colombia, Costa Rica, the Dominican Republic, Ecuador, Guatemala, and Puerto Rico, with more countries coming in 2022. 

The TTS division has also made other moves recently, launching a new global real-time liquidity sharing solution, which assists global companies become more efficient with their liquidity and working capital. If you're a Citigroup shareholder, the further growth and buildout of TTS is exactly what you want to see. The division can generate a mid-30-percentage return on tangible common equity -- the technical rate of return on the physical capital the unit uses -- in a normalized rate environment, which is superb.

Citigroup offers good value

Citigroup has long lagged its peer group in terms of returns and profitability, so a strategy refresh was long overdue. The road is not simple or easy, as there is work on the regulatory front to correct the longstanding deficiencies. But a real plan is starting to come into place at the bank, and Fraser and the management team seem to be moving with some urgency.

There are still other parts of the business to address, but simplifying the company and focusing on its strengths makes sense. The chance for investors to buy into Citigroup, one of the largest banks in the world, while it is trading below tangible book value is a chance to get in with great upside ahead.