Citigroup CEO makes sweeping management changes to simplify bank, cut jobs

By Tatiana Bautzer

NEW YORK (Reuters) -Citigroup CEO Jane Fraser announced a major management reorganization that will see more job cuts and give her more direct oversight over its businesses as she seeks to simplify the bank’s structure.

The heads of the bank’s five businesses will now report directly to Fraser. They include: Shahmir Khaliq, who runs services, Andrew Morton in markets, Peter Babej for investment and corporate banking on an interim basis, Gonzalo Luchetti in U.S. consumer banking, and Andy Sieg in wealth when he joins the company later this month.

“We are making bold decisions to meet our commitments to our shareholders,” Fraser said in a statement.

Job cuts are expected with the reorganization, but the bank did not estimate the number of positions being eliminated or the financial impact, sources familiar with the matter said. The severance costs are expected to be incurred in the fourth quarter.

In a memo to employees, Fraser said the reorganization will “result in people changing roles or leaving the firm.”

As part of the changes, the company is eliminating layers in its former divisions, the Institutional Clients Group and Personal Banking and Wealth Management. International leadership roles outside North America will be consolidated under the new head of International, Ernesto Cantu.

The new division heads will streamline the second and third layers of management, which are expected to be announced in November and January, the sources added, speaking on condition of anonymity.

Fraser and Chief Financial Officer Mark Mason will discuss the changes with investors at a conference in New York at 10:30 a.m. on Wednesday. Fraser will hold a town hall next week

In the statement, Fraser said the changes “eliminate unnecessary complexity across the bank,” and that will contribute to delivering medium-term targets on the bank’s restructuring announced to investors.

The sweeping reorganization is another step in Fraser’s strategy to improve profitability and simplify the bank announced early last year. Although Citi has concluded steps including divestitures, the stock price has failed to react. Citigroup (NYSE:) shares are still valued at less than half book value, whereas competitors hover around 1.