A Fed-Up Jane Fraser Is Downsizing at Citigroup to Fight Bank’s Painful Slump

Inside Citigroup Inc., managers are scrambling to carry out the Wall Street giant’s biggest restructuring in two decades.

(Bloomberg) — Inside Citigroup Inc., managers are scrambling to carry out the Wall Street giant’s biggest restructuring in two decades. 

They have eight weeks left. 

Chief Executive Officer Jane Fraser has given her top 150 managers until the end of November to explain how they plan to strip away the layers of bureaucracy that have long plagued the company. For staffers awaiting their fate, that spells weeks of anxiety-ridden town halls and nervous one-on-one meetings with their bosses.

The overhaul is in some ways an admission that Fraser’s efforts since taking over almost three years ago have done little to reverse some unpleasant truths: Citigroup is the least profitable major US bank. Once the world’s largest financial institution, it’s now worth less than it was 25 years ago. The bank has a market value of roughly $79 billion, while JPMorgan Chase & Co.’s has grown by more than $110 billion in just the last year.

For shareholders, that’s translated into a 40% stock plunge since Fraser got the top job, the worst performance — by far — of any of the biggest US banks.

Now, the company has unleashed an army of efficiency experts from Boston Consulting Group to help managers figure out which roles can be eliminated. And Fraser, who championed the idea of turning Citigroup into a bank “that has a human side,” is delivering a starkly different message to employees: Get on board or get out.

“We have taken hard, consequential, tough decisions here,” Fraser told investors at a conference this month. “They are not going to be universally popular within our bank. It’s going to make some of our people very uncomfortable. I am absolutely fine with that.” 

This account of how the company is trying to turn itself around is based on conversations with nine people familiar with recent events inside Citigroup, who asked not to be identified discussing internal deliberations. Danielle Romero-Apsilos, a spokeswoman for the bank, said the firm is committed to a set of medium-term targets it outlined last year and plans to demonstrate “proof points” of progress toward them.

“We are clear-eyed about what has held us back in the past and are implementing a strategy to address those issues and increase the returns we generate for our shareholders,” Romero-Apsilos said.

The bank has already axed 5,000 jobs this year, moves that cost the company $400 million in severance charges in the second quarter alone. This next phase, though, will be more about eliminating the executive roles that sit two or three layers below the CEO that are tied to old divisions and legacy geographies.

For the first six months of the year, Citigroup, with 240,000 employees worldwide, reported a compensation ratio of about 37%, compared with 29% at JPMorgan. To get that ratio in line with its bigger rival, Citigroup would have to cut compensation costs by roughly 20%, assuming revenue for both firms stayed the same.

“What it appears they’re doing is eliminating positions and not people,” Jason Goldberg, an analyst at Barclays Plc, said in an interview. “By that they mean, if you’re a good manager and your position gets eliminated, they’ll find something else for you to do and eliminate someone else.”

Returns Lagging

In early 2022, Fraser announced a sweeping new strategy: The Wall Street giant would focus on five key businesses, including wealth management and treasury services, as it ditched retail banking operations in 14 overseas markets.

One year on, Fraser gathered hundreds of the firm’s top bankers, traders and client-facing executives from all over the world into the main auditorium in the company’s Tribeca headquarters to reinforce that message.

The thing was, Fraser had vowed the moves would help her boost a key measure of profitability known as return on tangible common equity to at least 11% by 2027 at the latest. But already she had disposed of roughly half a dozen retail units around the world, and returns were still dropping, meaning there was little evidence that the turnaround was bearing fruit. 

What’s worse, most of Fraser’s peers were already notching returns much higher than even her initial goal. JPMorgan’s return on tangible common equity was 16% in the first six months of 2023. At Bank of America, that ratio was 14.8%.

To Fraser, something had to give. She spent that day trying to rally her best troops to the challenge. She also began telegraphing to them all of what was to come: the biggest restructuring of Citigroup this century.


In Fraser’s first few years at the helm, she tried to cultivate Citigroup’s image as “a bank with a soul.” She made a name for herself in corporate circles with initiatives like “Take Time To Breathe” hours, which required all Citigroup employees to leave the 12 p.m. hour free of calls and meetings. She urged staffers to turn any internal meetings on Fridays into audio-only calls to combat “Zoom fatigue.”

But along the way the CEO has never shied away from her ambition to turn Citigroup back into a banking powerhouse, with the profitability to match. To do so, she’s vowed to be clinical and dispassionate when it comes to remaking the firm. 

It wouldn’t be the first time: Fraser rose through the ranks of the Wall Street giant as a strategy guru, encouraging leaders to cleave entire businesses and eliminating nearly 100,000 jobs along the way.

As the bank’s results have continued to falter in recent months, that side of Fraser has increasingly been on display.

“I know many of you share my frustration that we are seriously underestimated as a bank,” Fraser told staffers in a memo this month.

Take the investment-banking division: Fraser was one of the first to ax headcount as revenue plunged and the business lost market share to rivals in recent quarters. The New York-based firm has dismissed hundreds of people across both investment banking and trading this year, including dozens of people just this month.

Town Hall Talks

Over the summer, the CEO ruffled feathers again when she instituted a crackdown on staffers who were flouting the firm’s return-to-office policies. Citigroup has one of Wall Street’s most flexible approaches to working remotely, requiring the vast majority of employees to log just three days in the office per week. Some were still persistently working from home, though, and Fraser instructed managers to use midyear evaluation conversations to warn them there would be consequences.

Fraser announced Citigroup’s restructuring on stage with Chief Financial Officer Mark Mason at an investor conference. Soon after, the two huddled in a conference room with some of the firm’s investors to further explain how the changes will help Citigroup lower expenses and, ultimately, boost returns.

Shareholders remain unconvinced, and have continued to punish the stock. It now trades at a price-to-book ratio of 0.42, the lowest level among major US banks and one that implies investors don’t believe the bank’s assets are worth as much as the company says.

In Fraser’s re-imagined Citigroup, the 56-year-old Scot wants things to be simpler: She decided to do away with the firm’s two core operating units — one that focused on consumer offerings and another that housed the institutional businesses. The CEO also eliminated the three regional chiefs that oversaw Citigroup’s business in 160 countries around the world.  

In their place, she elevated the five executives overseeing the key businesses she’s betting on — trading, investment banking, services, US consumer and wealth — to her executive management team. She also appointed Ernesto Torres Cantu as head of the international business to oversee seven executives that lead different regional clusters.  

Managers are now drawing up organizational charts to help them decide which executives to move and which to dismiss so the rest of the company looks like Fraser’s rejiggered management team. Job cuts will likely start later this year and probably continue until the end of the first quarter.

Simpler Citigroup

Fraser was keen to have employees’ managers involved in any discussion about dismissals, but that meant she would have to announce they were coming without a firm plan for how many would be needed. The trade-off was that any cuts would be more precise, but anxiety would run high in the meantime.

It was a trade-off she was willing to make. Now, she and her top deputies are on a mission to convince employees of the merits of her new, simpler Citigroup.

“If you’re building a house, you would want Jane Fraser as an architect. I think the plans that she’s laid out are cohesive and logical,” Mike Mayo, an analyst at Wells Fargo & Co., said in an interview. “As an architect for this new revised building called Citigroup, she seems to be doing great. The big question, though, is can she build it?”

For the firm’s investment bankers, Fraser promised they would still control relationships with CEOs and CFOs, despite creating a new client organization under David Livingstone. Instead, she said in a memo that the “new structure frees up more of their time to focus on the inevitable bounce-back in deal activity without the multitude of other responsibilities that invariably take time away from that mission-critical goal.”

Town hall attendees have questioned Fraser on whether her plans will actually make Citigroup simpler. Take, for instance, the seven cluster heads appointed to oversee different regions around the world. One employee asked how Fraser would ensure they didn’t start acting like the three regional chiefs she’d just eliminated.

“If they do, they’re going to get a phone call from Ernesto and me very quickly,” Fraser warned in a recent town hall, according to a transcript of the remarks seen by Bloomberg News. “This is something we ask everybody to do — it’s about lighter, it’s about less,” she said, arguing the changes are about ensuring “we don’t have all these management processes and structures that we don’t need.”

At another gathering, Mason was adamant with staffers that these changes won’t just result in Citigroup moving executives around to new roles.  

And then there was one employee who asked Chief Operating Officer Anand Selva if staffers could volunteer to be let go.

The answer was no.

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