Citigroup (C) has initiated a fresh wave of job cuts targeting senior managers on Monday, marking a significant step in the extensive reorganization plan unveiled two months ago by the nation’s third-largest bank.
The job cuts at Citigroup, representing approximately 10% of senior manager roles, equating to around 300 managers, were reported by Bloomberg. Currently employing around 240,000 people, the New York City-based financial giant aims to realign its organizational structure with the recently introduced, simplified operating model.
In an official statement, Citigroup addressed the ongoing changes, stating, “Today we shared with our colleagues the next layer of changes across many of our businesses and functions as we continue to align Citi’s organizational structure with our new, simplified operating model.” The statement acknowledged the difficulty of the decisions being made but emphasized their necessity in the pursuit of the bank’s strategic objectives.
The job cuts at Citigroup reflect broader challenges faced by Wall Street and the banking industry throughout 2023. Major banks, particularly those heavily involved in trading and investment banking, have grappled with a dealmaking slump, economic uncertainties, and the repercussions of higher interest rates from the Federal Reserve. A third-quarter report from Johnson Associates suggests that bonuses in the financial services industry are anticipated to remain flat or decrease for the year, particularly in investment and commercial banking.
CEO Jane Fraser’s restructuring plan, unveiled in September, aims to address Citigroup’s lagging stock price and eliminate decades of inefficiency. Fraser, who took over the leadership position after the stock decline had already begun, has witnessed a 31% drop in Citigroup’s stock during her tenure, nearly twice the decline observed in other major banks.
Fraser’s strategy involves a departure from the traditional two mega-divisions model, opting instead for the creation of five separate units with leaders reporting directly to her. This structural shift is expected to result in a reduction in the overall workforce. Fraser acknowledged the impact on employees in September, stating, “We’ll be saying goodbye to some very talented and hard-working colleagues.”
Apart from the workforce reduction, Fraser is steering Citigroup away from consumer banking operations in various parts of the world, as outlined in a plan announced two months after she assumed the CEO role in 2021. The original plan targeted the exit from 14 consumer franchises in Asia, Europe, the Middle East, Africa, and Mexico. Subsequently, Citigroup has closed nine of these franchises, including those in Australia, Malaysia, India, and Taiwan.
In a recent announcement, Citigroup revealed the completion of the sale of its consumer operations in Indonesia. Singaporean bank UOB, acquiring four of Citigroup’s Asian franchises, disclosed in a separate statement that these acquisitions have added 5,000 people to its workforce.
Insiders note that what sets this restructuring apart from previous initiatives under Fraser’s predecessors is the removal of the middle layer of management that initially reported to the CEO. Citigroup’s CFO, Mark Mason, is expected to provide further insights into the ongoing restructuring at a banking conference scheduled next month in New York.
Source: Yahoo Finance
