Citigroup announced its largest reorganisation since almost two decades. The company gave more control to its chief executive Jane Fraser and simplified its management structure.
The changes are coming as Fraser battles to turn the corner at the US’ third largest bank in terms of assets. For years, the bank has been behind its peers and plagued by operational and regulation issues.
Citi is transforming from two large business divisions — one focusing on commercial clients, and the other on consumer business — to five divisions that are made up of their primary business segments.
Fraser will be reporting directly to the heads of these five units, eliminating the previous management layer between the chief executive officer and the business leaders.
Fraser described the restructuring as the “most consequential change” she made to the bank’s management. She acknowledged that the size of the restructuring would make some Citi employees uncomfortable, but said she was “absolutely okay” with the move.
Citi’s stock was up 1.8 percent at midday on Wednesday in New York after the news. It was reported that the bank was considering overhauling its organizational structure due to the retirement of Paco Ybarra.
Fraser wrote to his staff that the reorganization would “eliminate unnecessary complexity”, but also acknowledged that it would mean “saying goodbye” to “some very talented and hardworking colleagues”.
She said: “I’m sure many of you are frustrated that we as a bank are seriously underrated. . . “The opportunity before us is immense, and the changes we make to our operations will help us to achieve our goal of becoming the winning bank that we know Citi can become.”
A costly round layoffs dragged down the bank’s latest results.
Citi stated that no decision has been made regarding the number of positions to be eliminated in the restructuring. The bank announced that it would begin a 30 day period to realign its businesses. It would then release more information by the end November about the restructuring.
The bank will no longer have regional managers, but instead be grouped geographically around its US and non US businesses. The bank announced that Ernesto Torres Cantu will lead the new international unit, previously heading Citi’s Latin American operations.
Citi said that it would also be launching a recruitment process for a new leader of one of its five new units, the corporate, commercial, and investment banking unit. Peter Babej will lead this operation in the interim. He was previously Citi’s head of Asia. Babej is expected to retire sometime next year after the bank names a new head of banking.
The current leaders of the four other units – wealth management, market services, transaction services and US consumer bank – will continue to manage them.
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