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Citigroup announced its biggest restructuring in nearly two decades: giving Chief Executive Jane Fraser more control, simplifying its management structure and cutting jobs.
The changes come as Fraser, who took the top job at Citi in 2021, is struggling to turn around the third-largest U.S. bank by assets, which has underperformed peers for years and has been plagued by operational and regulatory problems.
Citi will transition from two large business units – one focused on commercial clients and the other on consumer business – to five business units made up of its core business segments.
The heads of these five units report directly to Fraser, eliminating a previous management level between the CEO and the business managers.
Fraser called the restructuring the “most consequential changes” she has made to the bank’s management. She said she was aware that the scale of the moves would make many Citi employees “uncomfortable,” but added that she was “absolutely comfortable” implementing the changes.
Shares of Citi rose 1.8 percent midday in New York on Wednesday following the news. The Financial Times reported last month that the bank was considering revamping its organizational structure following the resignation of Paco Ybarra, one of its top executives.
In a memo to staff, Fraser said the restructuring would “remove unnecessary complexity” but acknowledged it would result in “the departure of some very talented and hard-working colleagues.”
Alluding to Citi’s continued status on Wall Street, she added: “I know many of you share my frustration that we are seriously underrated as a bank.” . The opportunities ahead are enormous and these changes to the way we work will accelerate our work to become the successful bank we all know Citi can be.”
The bank’s recent results lagged those of its peers, partly because a costly wave of layoffs hurt profits.
Citi said no final decision had been made on the number of jobs it would cut as part of the new restructuring. The bank said it would launch a 30-day period to realign its operations and publish further details by the end of November on the restructuring, which is expected to be implemented by the end of the first quarter of 2024.
Geographically, the bank will be organized by its U.S. and non-U.S. divisions, rather than having regional heads. The bank said the new international unit will be led by Ernesto Torres Cantu, previously head of Citi’s Latin America operations.
Citi also said it had begun a search for a new head of its corporate, commercial and investment bank, one of five new units. In the meantime, this operation will be led by Peter Babej, who was previously head of Citi’s operations in Asia. The bank said Babej will retire sometime next year following the appointment of a bank chief.
The four other units – asset management, transaction services, markets and U.S. consumer banking – will be led by their current leaders.