Tech jobs bolstered Citi's workforce during Q3, even as 2,000 positions were cut overall
In a significant move to streamline its operations and increase efficiency, Citigroup (Citi) has announced a series of changes aimed at reducing costs and improving its financial performance.
The bank has identified 1,000 internal profit-and-loss reports it will no longer need to compile, marking a step towards streamlining its internal processes. Citi has also cut 60 management committees, freeing up over tens of thousands of people-hours annually.
As part of this restructuring effort, Citi will shed its retail presence in 14 international markets. In the third quarter alone, the bank cut 2,000 jobs, bringing the total to 7,000 roles trimmed this year. However, it's important to note that these job cuts do not include downsizing related to the reorganization Citi announced last month.
CEO Jane Fraser stated that layoffs are planned for the first quarter of 2024, and the bank aims to eliminate layers, duplication, and complexity, allowing it to operate more agilely. The bank will strive to realign under "single points of accountability," targeting co-heads of some units.
Fraser gave an example of the reorganization: the bank will have the North Asia head and the South Asia head, and all other related roles will collapse into those two. This restructuring is expected to cascade through the company and continue through the end of the first quarter of 2024.
Top managers are expected to detail their workforce-cut plans by the end of November. The bank's workforce has remained steady at 240,000 for the past four quarters due to the hiring of tech staff to modernize its data architecture and resolve two consent orders from 2020.
Citi has booked severance costs for 5,000 positions, and the bank's severance charges for the year so far have totaled $650 million, an increase from $450 million in the first half of 2023.
In terms of investment in technology, Citi spent about $3 billion on tech in the third quarter. The bank has not made any specific mentions of Commercial, Retail, Technology, or Risk departments being targeted for these changes.
Fraser emphasized that these changes are tough but necessary to create a simpler firm that can operate faster and better serve clients. The bank aims to achieve an efficiency ratio of less than 60%, a common equity tier 1 capital ratio of 11.5% to 12%, and a return on tangible common equity ratio of 11% to 12%.
In conclusion, Citi's restructuring efforts are aimed at improving efficiency, reducing costs, and streamlining its operations. The bank is making significant changes to its management structure and retail presence in various international markets, and these changes will continue into the first quarter of 2024.
