Citigroup CEO Jane Fraser is facing mounting pressure to turn around the struggling global bank. After announcing a corporate overhaul in September, Fraser warned that layoffs would be part of the restructuring. The talks of job cuts, which could amount to at least 10% of the workforce in several major businesses, have caused anxiety among employees. Fraser’s predecessors have also struggled to manage Citigroup, which has lagged behind its rivals in terms of performance and valuation.
To fix the bank, Fraser is under pressure to make substantial headcount reductions. Analysts believe that expense cuts are necessary for Citigroup to improve its returns and stock performance. Fraser has set a goal of boosting Citigroup’s returns to at least 11% in the next few years, but analysts are skeptical that this target can be achieved. If Citigroup fails to generate returns above its cost of capital, there may be renewed calls to dismantle the company.
Fraser has put Titi Cole, Citigroup’s head of legacy franchises, in charge of the reorganization. Boston Consulting Group also has a key role in mapping out the bank’s organization and making recommendations. While the exact number of layoffs is still being determined, executives are expected to see cuts beyond 10% due to Fraser’s push to eliminate overlapping responsibilities. Operations staff supporting divested or reorganized businesses are also at higher risk of layoffs.
Investors will be looking for expenses to drift lower before being convinced of Citigroup’s turnaround. The bank has said that costs will start to ease in the second half of 2024. Fraser and her deputies have the final say on the overall plan, which is primarily focused on removing unnecessary layers to improve client service. Citigroup declined to comment further on the restructuring.
Citigroup’s stock has been underperforming, and Fraser’s restructuring plans aim to address the bank’s challenges. The success of the overhaul will be crucial in determining the future of the company and whether more drastic measures, such as dismantling, will be considered. Fraser is determined to deliver on the bank’s full potential and meet the commitments made to stakeholders.
Source: CNBC
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