Ready or not, changes are coming to Citigroup.
The bank announced a massive overhaul Wednesday that'll reduce management layers and almost certainly lead to job cuts.
Insider's Jennifer Sor has more on the reorg, deemed by CEO Jane Fraser as the most consequential change to Citigroup in nearly 20 years.
Citigroup is pitching the move as a way to simplify its structure. Case in point: Fraser said the changes eliminated 35 committees.
Changes like these are bound to ruffle some feathers, but Fraser isn't bothered by it. The reorg will "make some of our people very uncomfortable," but the CEO said she's "absolutely fine with that."
That might seem like a harsh stance, but understand the bank needs tough love. Citigroup's share price is down nearly 40% since Fraser took over as CEO in March 2021.
To be fair, Fraser's tenure has been an uphill battle. She inherited plenty of headaches from her predecessor, Michael Corbat. That included the bank accidentally wiring $900 million, which is the type of thing that's typically frowned upon in banking.
But two-plus years later, problems persist. Before the announcement, the bank's share price was down almost 9% this year, trailing all of its fellow big bank peers in the US except Bank of America.
Citi's overhaul represents how big banks are scrambling to stay on top of a financial world passing them by.
When news of Citi's reorg broke, I immediately thought of Goldman Sachs. The prestigious investment bank has also grabbed headlines for its multiple reorgs amid a failed push into consumer banking under CEO David Solomon.
Meanwhile, my colleague Rebecca Ungarino pointed out that Wells Fargo has faced continued setbacks from a slew of fines over the years as CEO Charlie Scharf continues to work to right the ship.
Even the big bank having the best year — JPMorgan — isn't completely happy. CEO Jamie Dimon recently quipped he "wouldn't be a big buyer of a bank" in reference to proposed regulations requiring big banks to keep more money on the sidelines.
But banks' retrenchment could just signal an opportunity for others to fill in the gaps. Whether it's fintechs or so-called shadow banks, there's no shortage of players looking to offer services previously dominated by big banks.
That could be a welcome change, but there are risks to moving those services outside the walls of a highly regulated institution.
Sometimes, the devil you know is better than the one you don't.
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