Yahoo Finance Citigroup (C) Takes Early Steps in Its Reorganization Plan
Per a global memo to staff seen by Reuters, Citigroup Inc. C has started taking early steps in its reorganization plan announced last month. The bank’s managers are reportedly reviewing staff lists to decide who will remain in place, who will be reassigned and who will be laid off during the company’s organizational restructuring by November.
Sara Wechter, Citigroup’s chief human resources officer, stated, “Some roles will change, new roles may be created, and roles that do not fit our new structure will be eliminated. This next layer of change is scheduled to be announced in November.”
According to the memo, employees who lose their jobs can apply for other positions. Also, the bank will provide severance pay and notice periods where eligible.
Notably, on Sep 13, Citigroup announced an organizational restructuring, the biggest for the company in decades, to simplify and eliminate extra management layers. The reorganization will make decision-making swifter, drive increased accountability and increase focus on clients.
As part of the reorganization process, management layers in Personal Banking & Wealth Management, and the Institutional Clients Group will be removed. Also, the bank is expected to reduce existing regional layers in the Asia Pacific, Europe, Middle East and Africa, and Latin America.
Specifically, the leaders of each of C’s five main businesses — Banking, Markets, Services, Global Wealth Management and U.S. Personal Banking — will report directly to the company’s CEO Jane Fraser and be members of the executive management team, thereby giving Fraser more direct control over the businesses.
Citigroup will create a client organization group for fortifying client engagement and experience across the bank’s global network and businesses.
While announcing the restructuring plan, Fraser stated, “These changes eliminate unnecessary complexity across the bank, increase accountability for delivering excellent client service and strengthen our ability to benefit from the natural linkages that exist amongst our businesses, all with an eye toward delivering on our medium-term targets and our Transformation.”
The company believes that in addition to driving efficiency, the overhaul will revive its share price that has been lagging its peers.
Apart from the above-mentioned steps, Citigroup will begin consultations required in the U.K.
A few days ago, the company alerted its employees in the U.K. of probable redundancies as part of the reorganization efforts.
While it is not yet clear which areas of the bank’s U.K. business will be affected by the job cuts, as many as hundreds of roles are expected to be affected. The company is likely to set up a consultation process, whereby employees can give their feedback.
Citigroup stated, “We are updating colleagues on our next steps to align our structure with our strategy, and consulting with the London Consultation Forum about roles currently under review, some of these roles may change, while others will remain largely the same.”
Over the past six months, shares of Citigroup have lost 13.2% compared with the industry’s fall of 0.8%.
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Currently, Citigroup carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restructuring Efforts by Other Finance Firms
At an investor conference, Wells Fargo’s WFC CFO, Mike Santomassimo, noted that the company was eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
Since third-quarter 2020, WFC has cut almost 40,000 jobs. Santomassimo added, “We had too much real estate before Covid, and so we’ve been methodically working through that portfolio over the last few years.”
Likewise, Goldman Sachs GS has been planning a wave of job cuts, which are part of its yearly practice of letting go of those employees who are deemed as the lowest performers.
The expected move usually affects 1-5% of GS’s total staff. The company is aiming to cut jobs at the lower end of the range, primarily in its main business divisions like investment banking and trading.
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