Citigroup's Bold Transformation: Cutting 10% of Workforce in Ambitious Overhaul

In a strategic move aimed at revitalizing its performance and stock value, Citigroup has announced a significant workforce reduction, with approximately 10% of its employees set to be let go over the medium term. The decision, part of CEO Jane Fraser's comprehensive overhaul plan, reflects the bank's determination to address longstanding challenges that have left it trailing behind peers since the 2008 financial crisis.

The New York-based bank disclosed the details of the workforce reduction on Friday, emphasizing that around 20,000 employees would be affected in the medium term, typically denoting a three- to five-year period. As of the end of 2023, Citigroup had approximately 200,000 employees, excluding its Mexican operations that are undergoing a spin-out process.

CEO Jane Fraser initiated a broad restructuring of Citigroup, the third-largest U.S. bank by assets, in September to address issues of inefficiency and boost its market standing. The move comes after Citigroup has struggled to control expenses over the years, resulting in its position as the least valued among the six largest U.S. banks.

The restructuring effort, internally referred to as "Project Bora Bora," has already witnessed waves of layoffs, beginning with top-level executives. Another round of job cuts is anticipated on January 22, according to an inside source, although Citigroup has not officially commented on this.

Citigroup confirmed that it incurred a $780 million charge in the fourth quarter related to Fraser's restructuring project and anticipated potential additional expenses of up to $1 billion in severance and other costs in 2024. The bank estimates that these measures could lead to a substantial reduction of up to $2.5 billion in costs over time.

In a notable disclosure, Citigroup mentioned that the actual number of job cuts could be "slightly lower" if the bank opts to use internal resources rather than outsourcing certain functions. Despite these potential adjustments, the restructuring signals a transformative phase for the bank as it seeks to streamline operations, enhance efficiency, and ultimately bolster its financial standing.

As the workforce reduction takes shape, reports indicate that some Citigroup employees are proactively using vacation time or mental health leave to explore alternative employment opportunities. The unprecedented scale of the restructuring underscores the magnitude of Citigroup's commitment to reshape its trajectory in the banking industry.

Thursday, 23 May 2024