Citigroup CEO Jane Fraser warned her bank’s 244,000 employees that it was time to “get off the bus” and sign up for her overhaul of group as she cut jobs and hacked back the lender’s top-heavy managerial structure.
Fraser’s uncompromising tone seemed to be a shift in the way she spoke to employees, given that Fraser had cultivated a reputation of being approachable during her two years as CEO of Citi. The message came just days after Fraser announced the largest restructuring in 15-years, as she aims to reorientate the bank around business units and not geography.
“Get onboard.” According to those who heard it, Fraser said at a town hall meeting last week that the bank has high ambitions and the train will move quickly. “So, lean in and help us win clients, help deliver the changes or get off the bus.”
Fraser, who took over the helm of US’s third largest bank in 2021, has not yet delivered on her promise to make the lender more risk-free and profitable. Fraser was given the opportunity to implement a reorganisation after Paco Ybarra left Citi. He had been a 36-year Citi veteran with a large power centre.
Fraser and her executive team have yet to announce a target for cost reduction or put a number of jobs at risk. This has caused frustration within the company, according to people who were briefed about the issue.
Fraser has not appointed a permanent leader of its Investment, Commercial and Corporate Bank, an important position in the new structure. Citi has hired Egon Zehnder, a search firm specializing in executive searches, to fill this role, according to three sources familiar with the situation. The search is still at an early stage and focuses on external candidates.
Fraser’s announcement of the overhaul has led to some senior departures. The pace is expected accelerate in the coming weeks. According to a memo sent by Citi earlier this month, Eduardo Cruz is leaving the bank. The list includes Kristine Braden, the European unit’s head. He was one of several high-level executive focused on Citi’s non US business who left after Fraser’s announcement.
By memo, the bank informed UK employees that it would begin a review this week which will lead to “reductions in roles”. The memo didn’t specify how many jobs would be cut out of the total 16,000 UK staff.
It’s consuming us all. Citi banker: “Everyone is wondering how this will affect their business.” She’s got a strategy. She won’t let anyone see her plan for a little while.”
Some Citi employees are enthusiastic about Fraser’s renewed effort to re-energize and streamline the bank. The move could also revive the share price of the group, which has dropped by about a third since Fraser took over.
One senior Citi banker said, “If Jamie Dimon had said that, I could understand the anger, but you have to be better than we are,” referring to JPMorgan Chase’s head. “Her actions are logical, as we had been running this business at too high a cost and needed to move to the right place.”
Citigroup declined comment.
Fraser’s plan for revitalising Citi includes a major component: dismantling its focus on geography, which has been an integral part of the organisation chart and identity of Citi for decades.
John Reed of Citicorp, when promoting the merger between Sandy Weill’s Travelers Group and Citicorp, claimed that Citi’s ability to offer a wide range of financial products “on a locally based basis” would be key to making the deal successful. Reed stated a few year after the merger that “we minimised our trans-border business”. “We are a local banker and have become embedded in the local community.”
Vikram Pandit, the former Citi chief executive who led the company during the financial crisis, often spoke of his desire to become the number one bank in 100 major cities around the world.
Some bankers claim that Citi is often stymied by a matrix of conflicting leadership. One senior Citi manager said that any decision had to be approved by three managers – the country head, the product head and the coverage head.
Fraser is trying to change the script. Citi, as part of its reorganisation process, has appointed Ernesto Torres Cantu to be the sole international leader of all of their units outside of the US. This replaces the previous model of three regional heads.
Noor Menai is the CEO of CTBC Bank USA. She spent over a decade working as a emerging markets banker for Citi. “I think the changes are a positive thing, to the extent they make it easier for the investors to see and isolate the performance of each business.”
Fraser is committed to Citi’s international focus, which she says is a key differentiator between the bank and its competitors. She says that removing much of Citi’s geographical management is an important part of how the bank can reduce costs and simplify.
Fraser, speaking at an investor’s conference soon after the announcement of the reorganisation, said: “When we first formed our regional organization many, many years back, it was a completely different bank.” “We don’t want that kind of management structure, local governance or processes.”
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