Citigroup will strip out a layer of management and cut jobs in a sweeping reorganization 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 now report directly to the CEO, and the company will also cut regional leadership roles outside North America. Job cuts are expected, but the number and financial impact remain unclear.
The restructuring is a significant milestone for Fraser, who took over in 2021. Since then, she’s worked to slim down the global lender after a massive acquisition spree under former chief Sandy Weill. This brought the firm to near collapse during the 2008 financial crisis and led to a multibillion-dollar government bailout. But investors have remained skeptical about whether Fraser will succeed where her predecessors failed, and the firm’s shares remain well below those of competitors.
In a memo to staff seen by Reuters, Fraser said the reorganization would eliminate 35 committees and accelerate decisions. “It will also mean saying goodbye to some very talented and hard-working colleagues,” she wrote. Citi hasn’t yet disclosed how many employees might be affected by the shakeup, but the firm will no longer have three regional chiefs overseeing operations in 160 countries worldwide. At least four of Fraser’s senior deputies have been given new roles, and the company is hunting for a leader to head its banking division, which includes the investment banking unit.
The overhaul will result in five primary business divisions, each headed by a new general manager: Shahmir Khaliq for services, Andrew Morton for markets, Peter Babej on an interim basis for investment and corporate banking, Gonzalo Luchetti for U.S. consumer banking, and Andy Sieg for wealth management. The bank is eliminating the previous divisions of Institutional Clients Group and Personal Banking and Wealth Management and consolidating international leadership roles under Ernesto Cantu, its new head of international.
Despite the change, the company won’t reduce technology spending as it tries to modernize its systems. It has invested billions to do so, and Fraser has vowed to continue the effort.
The reorganization comes as Citi is facing growing scrutiny by regulators over the firm’s risk management and internal controls. The bank hasn’t managed to get its shares to rise above its peers, even after years of divestitures and significant investments in the firm’s regulatory compliance. It also faces criticism from activist shareholders and Washington lawmakers. It’s a tall order, but Fraser has shown she’s up to the task. Her plan to refocus on institutional clients could pay off, but it will take time. Until then, the bank will continue to pare costs and focus on improving its performance. That will require the firm to keep shedding layers of bureaucracy and reducing its reliance on manual labor. That’s why the reorganization is essential. It’s the first real sign that this is a new era for Citigroup.