Yahoo Finance Citigroup (C) to Announce First Round of Layoffs on Monday
Citigroup Inc. C is planning to make an announcement on Monday on management changes and the first round of layoffs, per a Financial Times article. This is in connection with the major organizational restructuring stated by its chief executive office, Jane Fraser, in September 2023. The corporate realignment is expected to eliminate thousands of jobs.
Per a person familiar with the matter, the strategic overhaul plan, that has been code named as Project Bora Bora, is in its initial stages. In fact, in the top-down review of C’s organizational structure, only 1% of total 240,000 bank positions have been worked through.
Management is planning to reduce the thirteen management layers to eight. Of this, it has already optimized the top two layers of its management structure that resulted in the reduction of around 15% of its functional roles. Further, it resulted in the elimination of 60 operating committees.
Pursuant to its organizational simplification process, the bank will make changes to its operating model in the fourth quarter of 2023. The new organizational structure will replace existing three reportable segments with five new reportable operating segments namely Services, Markets, Banking, Wealth and U.S. Personal Banking. Remaining activities will be clubbed under a separate All Other segment.
Fraser has already named these five business heads who would report to her directly and be members of the Executive Management team. These leaders have further announced the names of approximately hundred people who will operate the banks’ various lines of business. Citigroup expects to complete the restructuring and the subsequent layoffs by the end of March 2024.
The suggested announcement on Monday will involve the heads of different business units informing their staff regarding the people who would fill up the next layers of leadership.
People familiar with the matter stated that minor reshuffling of job positions in the bank might take place. Moreover, individuals whose jobs have been eliminated or assigned a different role would be given a transition period during which they are permitted to apply for other positions at Citigroup. However, at the end of the transition period, employees not assigned any job role under the new organizational structure would be provided with details of their severance packages.
The organizational restructuring, the biggest for the company in decades is aimed at simplifying and eliminating extra management layers. Further, management believed that this would drive efficiency and increase accountability in the company.
Citigroup’s shares have lost 0.9% in the past six months against the industry’s 7.8% growth.
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C presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Finance firms in the United States, especially banks, are having to navigate their way through the current tough economic environment. To remain profitable amid the high interest rate environment and recession fears, financial institutions are undertaking several restructuring efforts, majorly job cuts.
Last month, in an effort to streamline business operations, Ally Financial Inc. ALLY started trimming its workforce, a move that is expected to impact less than 5% of ALLY’s overall headcount.
Spokesperson Peter Gilchrist has said in an emailed statement that the workforce reduction will occur across divisions and is not restricted to a single line of business.
In September, at an investor conference, Wells Fargo & Company’s WFC chief financial officer, Mike Santomassimo, noted that the company was eyeing opportunities to cut down expenses by reducing its real estate footprint and headcount.
Santomassimo stated, “We continue to believe we’ve got a lot more to do to make the company as efficient as it should be.”
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.”
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