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Citigroup unveiled its biggest restructuring in nearly two decades that will simplify the bank’s management structure and give Chief Executive Jane Fraser more control, but could also lead to significant job cuts.
The changes come as Fraser, who takes over the bank’s top job in 2021, is working to turn around the third-largest U.S. bank by assets, which has lagged behind peers for years and has been hampered by operational and regulatory oversight. Troubled by problems.
After the news broke, Citigroup shares rose 1.8% in midday trading in New York on Wednesday. The Financial Times reported last month that the bank was considering changes to its organizational structure following the retirement of one of its top executives, Paco Ybarra.
In a speech to investors earlier in the morning, Fraser called the restructuring the “most significant change” she has made to the bank’s management. She said she knew the scale of the move would make many Citi employees “uncomfortable” but that she was “absolutely happy” with it and committed to making changes.
In a memo to staff, Fraser said the reorganization would “eliminate unnecessary complexity” but acknowledged it would result in “saying goodbye to some very talented and hard-working colleagues.”
Fraser also expressed frustration with Citigroup’s continued lagging position on Wall Street.
“I know many of you share my frustration that we as a bank are significantly undervalued,” she wrote in the memo. “The opportunity before us is tremendous, and these changes to the way we operate will accelerate our Work and become known as Citibank.”
The bank’s recent performance has lagged rivals, in part because of a costly round of layoffs that cut into profits.
As part of the reorganization, Citi will transform from two large business units – one focused on business clients and the other on consumer businesses – into five divisions made up of major business units.
The heads of the five divisions will report directly to Fraser, eliminating previous layers of management between the CEO and business leaders.
Geographically, the bank will be organized around its U.S. and non-U.S. operations, rather than having regional heads. The bank said the new international unit will be led by Ernesto Torres Cantu, who previously served as Citi’s head of Latin America.
Citi also said it was looking for a new head of its corporate, commercial and investment bank, one of its five new divisions. In the interim, the unit will be led by Peter Babej, who previously served as Citi’s head of Asia. The bank said Babbage is expected to retire sometime next year following the appointment of a banking chief.
The other four divisions — Wealth Management, Transaction Services, Markets and its U.S. Consumer Bank — will be run by current leaders.
Citi said it has not yet made a final decision on the number of jobs that will be eliminated in the restructuring. The bank said it will begin a 30-day business restructuring and will announce more details of the restructuring before the end of November, which will be implemented by the end of the first quarter of 2024.
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