A signboard at a Citibank branch in Tokyo.Kim Kyung Hoon/Reuters
Citigroup C-N CEO Jane Fraser announced a major management reorganization on Wednesday that will result in more job cuts and give her more direct oversight over its businesses as she seeks to simplify the bank’s structure.
The heads of the bank’s five businesses will now report directly to Fraser. They include: Shahmir Khaliq, who runs services, Andrew Morton in markets, Peter Babej for investment and corporate banking on an interim basis, Gonzalo Luchetti in U.S. consumer banking, and Andy Sieg in wealth when he joins the company later this month.
“We are making bold decisions to meet our commitments to our shareholders,” Fraser, 56, said in a statement. The latest changes have already eliminated 35 committees, Fraser said, citing an example of efforts to reduce bureaucracy.
The sweeping reorganization 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.
“We have taken hard, consequential, tough decisions here,” Fraser told investors. “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.”
Job cuts are expected, but the bank did not estimate the number of positions being eliminated or the financial impact, sources familiar with the matter said. The severance costs are expected to be incurred in the fourth quarter.
On Wednesday, Citi shares moved up 2 per cent. They are still valued at less than half of its book value, while competitors such as Wells Fargo and Bank of America are above 0.8, and JPMorgan Chase at 1.4.
“Citi will cut out non-productive layers of management and reorganize 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. “Looking at the uptick in CPI data, it would make sense for banks to be more cost conscious.”
U.S. consumer prices (CPI) increased by the most in 14 months in August as gasoline prices surged.
“Investors are only going to give Citigroup credit for hard numbers meeting their goals,” said Eric Compton, banking analyst at Morningstar. “These changes seem fairly nuanced – all of the key players from 2022 are still in place.”
Citi is eliminating layers in former divisions Institutional Clients Group and Personal Banking and Wealth Management. International leadership roles outside North America will be consolidated under the new head of International, Ernesto Cantu.
The new division heads will take decisions about the second and third layers of management, which are expected to be announced in November and January, the sources added, speaking on condition of anonymity.
Fraser and Chief Financial Officer Mark Mason are addressing investors in New York at 10:30 a.m. on Wednesday. Fraser will hold a town hall with employees next week.