Citigroup unveiled a wide-ranging management shake-up on Wednesday and its chief executive, Jane Fraser, admitted in unusually frank terms that the bank was headed in the wrong direction and said that for the foreseeable future her employees “might not enjoy it so much.”
The global banking colossus said it would cut some divisions and move others to report directly to Ms. Fraser. Long known for its international arms, it will wind down some of its operations abroad and all but eliminate the overlapping, co-heads of various business lines. The firm’s three regional chiefs, who previously had wide authority to make decisions in their geographic areas — Asia Pacific, Latin America and in Europe, the Middle East and Africa — were eliminated.
The changes amount to a public confession that the bank has failed to crack the upper echelon of its peers in areas like investment banking and wealth management since Ms. Fraser took over two and a half years ago.
Citi’s stock is down 13 percent over the past year, though shares rose more than 2 percent on Wednesday after the bank announced the changes.
Ms. Fraser, in remarks at a financial services conference, said she would be keeping a closer eye on those who reported to her, and expected them to deliver results quickly. She said that in the coming days and weeks, word would cascade down to the bank’s more than 200,000 employees. An unspecified number will lose their jobs.
“At the end of the day, it is about increasing accountability in the organization,” Ms. Fraser said, predicting that it would “make some of our people very uncomfortable.”
Citi is not the only bank retrenching this year. The collapse of Silicon Valley Bank set off industrywide panic in the spring, and lenders large and small have been rushing to prove their sturdiness.
Truist Financial, the seventh-largest bank in the U.S., said earlier this week that it planned “sizable” layoffs in the coming months, part of $750 million in cost-cutting. Goldman Sachs has suffered waves of cuts, and is expected to trim further in the next few weeks.
Citi is far larger than those rivals, both in deposits and employees. In a memo to employees on Wednesday, Ms. Fraser said they would need to do more with less.
“We need a structure with fewer layers and clearer, more direct lines of decision making so that we can get things done more easily,” she wrote.
Questions remain about the details. Not only did the bank leave unanswered how many employees would lose their jobs, but it is still hunting externally for a new head of banking, one of the organization’s most crucial roles. Citi said Wednesday that it expected to disclose more information about layoffs before the end of November.
“The risk for this type of move,” wrote analysts at Wells Fargo, “is always undesired departures and internal strife.”