Citigroup Inc has announced a major restructuring plan under CEO Jane Fraser‘s leadership, aiming to eliminate 20,000 roles. This move, integral to Fraser’s strategy, is expected to save the company as much as $2.5 billion, positioning it for stronger returns in the coming years.
Challenging times
Despite the planned savings, Citigroup braces for immediate costs.”In the meantime, though, the firm expects to incur as much as $1 billion in expenses tied to severance payments and Fraser’s restructuring of the bank this year,” the company said in a statement.
Fourth quarter woes
Citigroup’s fourth-quarter performance fell short of expectations. “The fourth quarter was very disappointing,” Fraser admitted. The fixed-income traders particularly struggled, marking their poorest showing in five years, with a 25% revenue drop to $2.6 billion.
Restructuring for efficiency
Fraser’s September-initiated restructuring aims to reduce Citigroup’s bureaucratic layers from 13 to 8. “We are moving quickly, but we are doing it thoughtfully,” Fraser explained in a memo. This overhaul is projected to save $1 billion annually, cutting 5,000 managerial roles.
Focus on profitability
Fraser reaffirmed her goal to boost the bank’s return on tangible common equity to at least 11% by 2027. Citigroup’s strategic decisions, like exiting certain business units, align with this objective. “We are prepared to exit additional businesses… if they don’t make sense for the go-forward strategy,” CFO Mark Mason commented.
Headcount reduction
The firm’s workforce is set to decrease significantly. “In all, Citigroup’s firmwide headcount will decline by 60,000 jobs to 180,000 by the end of 2026,” Mason revealed. This includes the spinoff of the Mexican consumer unit Banamex.
A mixed financial picture
Despite a $1.8 billion loss in the fourth quarter, analysts see resilience in Citigroup’s underlying business. The loss included significant one-time charges related to the restructuring and other factors.
Looking ahead
The bank remains focused on its long-term growth and restructuring strategy. “The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out,” said Chris Marinac, director of research at Janney Montgomery Scott.
Bottom line
Citigroup’s sweeping job cuts and restructuring reflect a decisive shift towards streamlined operations and improved profitability. While facing short-term challenges, the strategy aims to position the banking giant for a stronger, more efficient future.
(With inputs from agencies)
Challenging times
Despite the planned savings, Citigroup braces for immediate costs.”In the meantime, though, the firm expects to incur as much as $1 billion in expenses tied to severance payments and Fraser’s restructuring of the bank this year,” the company said in a statement.
Fourth quarter woes
Citigroup’s fourth-quarter performance fell short of expectations. “The fourth quarter was very disappointing,” Fraser admitted. The fixed-income traders particularly struggled, marking their poorest showing in five years, with a 25% revenue drop to $2.6 billion.
Restructuring for efficiency
Fraser’s September-initiated restructuring aims to reduce Citigroup’s bureaucratic layers from 13 to 8. “We are moving quickly, but we are doing it thoughtfully,” Fraser explained in a memo. This overhaul is projected to save $1 billion annually, cutting 5,000 managerial roles.
Focus on profitability
Fraser reaffirmed her goal to boost the bank’s return on tangible common equity to at least 11% by 2027. Citigroup’s strategic decisions, like exiting certain business units, align with this objective. “We are prepared to exit additional businesses… if they don’t make sense for the go-forward strategy,” CFO Mark Mason commented.
Headcount reduction
The firm’s workforce is set to decrease significantly. “In all, Citigroup’s firmwide headcount will decline by 60,000 jobs to 180,000 by the end of 2026,” Mason revealed. This includes the spinoff of the Mexican consumer unit Banamex.
A mixed financial picture
Despite a $1.8 billion loss in the fourth quarter, analysts see resilience in Citigroup’s underlying business. The loss included significant one-time charges related to the restructuring and other factors.
Looking ahead
The bank remains focused on its long-term growth and restructuring strategy. “The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out,” said Chris Marinac, director of research at Janney Montgomery Scott.
Bottom line
Citigroup’s sweeping job cuts and restructuring reflect a decisive shift towards streamlined operations and improved profitability. While facing short-term challenges, the strategy aims to position the banking giant for a stronger, more efficient future.
(With inputs from agencies)
