Citigroup will strip out a layer of management and cut jobs in a sweeping reorganisation that will give CEO Jane Fraser more direct control as she seeks to simplify the Wall Street giant and boost its stock.
The heads of the bank’s five divisions will report directly to the CEO, and the bank will also cut regional leadership roles outside North America. Job cuts are expected, but the number and financial impact are still unclear.
We have taken hard, consequential, tough decisions here,” Fraser told investors in New York on Wednesday (Sep 13). “They are not going to be universally popular within our bank. It’s going to make some of our people very uncomfortable. I am absolutely fine with that … It is absolutely the right thing to do for our shareholders.”
Shares rose 1.7 per cent after chief financial officer Mark Mason said he was keeping the company’s expense guidance unchanged for the year.
The sweeping reorganisation is another step in Fraser’s strategy to improve profits and streamline the bank since she took the helm in 2021. Although Citi has sold businesses and is working on fixing regulatory problems, its stock price has lagged behind its peers.
The third-largest US bank is still dealing with a 2020 consent order by regulators demanding it correct several “longstanding deficiencies” in its internal controls.
Citi has named Shahmir Khaliq as head of the services unit, Andrew Morton in markets, Peter Babej for investment and corporate banking on an interim basis, Gonzalo Luchetti in US consumer banking, and Andy Sieg in wealth when he joins the company later this month.
“Citi will cut out non-productive layers of management and reorganise with a flatter structure that will certainly create savings on the balance sheet,” said Brian Mulberry, Client Portfolio Manager at Zacks Investment Management, who holds Citi shares.
The bank is looking to hire externally for the banking head. It will consolidate non-US businesses under Ernesto Cantú, its new head of international. It eliminated management layers in what was known as its Institutional Clients Group, formerly its largest division, and Personal Banking and Wealth Management.
The changes have eliminated 35 committees, Fraser said, citing an example of efforts to reduce bureaucracy.
The reshuffle is likely to prompt departures, Fraser said in a memo to employees seen by Reuters. She will hold a town hall next week.
-Reuters
