Jane Fraser, CEO of Citigroup, revealed plans for a corporate reshuffle on Wednesday, which is expected to streamline authority and speed up decisions. Sources from both the current and past workforce have described the existing Citigroup framework as tense between bosses and without any substantial responsibility, resulting in a lack of progress being made. Job losses are likely as part of the restructuring, though the company has yet to determine a specific number of people affected, according to people familiar with the situation. Jane Fraser, the Chief Executive Officer of Citigroup, declared a corporate restructuring on Wednesday, indicating that the move will reduce layers of management and speed up decision-making. In a statement, Ms. Fraser declared that Citigroup would be divided into five main divisions that have a direct reporting relationship to her. Previously, the company only had two major units for consumers and big institutional customers.The reorganization also includes job cuts, though the exact number has yet to be determined, based on reports from knowledgeable sources. Ms. Fraser is inching closer to her third year of leadership of Citigroup and is attempting to reinvigorate a firm that has been plagued by a weak stock market. While Citigroup is the third largest U.S. bank in terms of assets after JPMorgan Chase and Bank of America, it has a significantly smaller domestic retail banking standing than its counterparts. This helps explain why Citigroup has had a hard time in the years following the 2008 financial crisis.In her statement, Fraser stated: “These changes eliminate superfluous intricacy across the bank, increase responsibility for providing excellent customer service and fortify our capability to draw benefit from the natural correspondences that exists amongst our businesses, all with an eye on delivering on our medium-term goals.” Sources close to the company asserted that the earlier organizational set-up of Citigroup led to clashes between management teams and a lack of responsibility that stifled new strategies.
Fraser restructured the five businesses of U.S. personal banking, wealth management, investment and commercial banking, trading, and institutional services, while also centralizing management of non-U.S. enterprises under Ernesto Torres Cantú. Although the CEO has reduced Citigroup's international presence, exiting more than a dozen markets, including Mexico, it appears to have not been sufficient; the company's stock has dropped by 40% since Fraser took the helm in March 2021, the worst of the large bank competitors.At present, Citigroup stock is priced at around $41 per share, a valuation observed during the 2008 financial crisis, according to a Wells Fargo analyst Mike Mayo.Although several of its competitors are reducing staff in the ongoing Wall Street downturn, Citigroup's staff levels have risen due toimposed regulations to upgrade risk controls. In June, the total employee count amounted to 240,000, which is 4% more than the figure for the corresponding period last year.In a memo sent out to personnel, Fraser declared that the reorganization would be concluded by the first quarter of 2021, and alluded to the inevitability of certain job cuts: "We'll be saying goodbye to some very talented and hard-working colleagues who have made important contributions to our firm".
— This article was contributed to by Leslie Picker of CNBC.
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