Citigroup plans to operate five main businesses and terminate three regional chiefs who look after the operations in around 160 countries across the globe
Citigroup is gearing up for a series of job cuts as the firm launches the biggest restructuring in two decades. The revamp comes as a part of the efforts of Chief Executive Officer Jane Fraser to reverse the years-long decline in the stock price. Citigroup plans to operate five main businesses and terminate three regional chiefs who look after the operations in around 160 countries across the globe. Nearly 4 senior deputies of Citigroup got new roles in the revamp. The firm is also searching for a head of banking and this role will require the supervision of the investment banking unit.
This decision, however, will cause layoffs in the financial firm’s office roles. The number of people to be terminated from Citigroup is not yet finalised. Fraser in a conference told investors that they have made hard decisions that would be hard on people. “They are not going to be universally popular within our bank. It’s going to make some of our people very uncomfortable”, stated Jane Fraser.
The firm is closing off its long-time and important operating units. One of the units was focused on the firm’s consumer offerings while the other one concentrated on institutional clients. The financial firm instead of the old organisational flow will now have five main operating units. The services unit will be led by Shahmir Khaliq, the US personal banking division will be headed by Gonzalo Luchetti, and a trading division will be headed by Andy Morton.
The banking division will be headed by Peter Babej, while Citigroup’s wealth offering will be led by Andy Sieg. They will also be on Fraser’s executive management team which will have 19 people. Wells Fargo analyst Mike Mayo mentioned that this would help reduce the fiefdoms that have affected the firm. “The risk for this type of move is always undesired departures and internal strife, especially with Citi’s history”, said Mike Mayo.
Chief Executive Officer Jane Fraser says that the new changes introduced were mostly motivated by the desire to hold managers more accountable. The firm has already laid off most of its co-heads the company previously had who are running its significant businesses.
Tylor Dickson was named as solo head of investment banking and Manolo Falcó became the vice chairman. According to the reports by Bloomberg News, Fraser in a memo mentioned that they are confident the steps taken will simplify and improve the organisation and its competitiveness, and this will include changing roles and layoffs. “The scope of some roles has been intentionally changed to free up our producers and dealmakers to focus more of their time on clients and drive our results.” The number of employees in Citigroup had increased to 240,000 as it had a hiring frenzy of consultants, engineers, and other workers.
Currently, there is pressure to lay off employees and the bank will evaluate thousands of workers who work back-office functions such as human resources, finance, technology, and operations. This happened because many of the employees’ roles were attached to a particular region, which is the personal banking, wealth management division, or the institutional clients group. Mark Manson, the Chief Financial Officer stated that they are not planning to have this structure anymore.“As a result, that work goes away, those responsibilities go away, those people will have to go away.”
After the decisions, the shares of Citigroup group increased 2.1% reaching $42.54. The stock is down nearly 40% since Fraser took the helm in 2021. This was more than double the decline of any US rival during the time.