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‘Project Bora Bora’ starts as Citigroup undertakes its largest overhaul

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Reports suggest that the job cuts will affect thousands of the Citigroup staff

Employees of the American multinational investment major Citigroup now brace for a series of layoffs, amid the venture’s management changes as part of its biggest reorganization in decades.

As per the media reports, the job cuts will affect thousands of staff.

“Preparations for Monday’s (November 20, 2023) announcements were communicated verbally in meetings, according to a source familiar with the situation who was not authorised to speak publicly. Some staff may be able to apply for other roles at the bank,” commented Reuters, which reported extensively on the issue.

In October, Citi announced the biggest organisational overhaul in decades, where it decided to cut management layers from thirteen to eight. In the two top tiers of its leadership ranks, Citigroup has reduced 15% of the functional roles, apart from eliminating 60 committees.

Support staff in compliance and risk management, and technology staff working on overlapping functions are at risk of being laid off, Reuters mentioned.

In September 2023, Citigroup CEO Jane Fraser, while announcing the corporate overhaul, stated, “We will be saying goodbye to some very talented and hard-working colleagues.”

Fraser’s reorganization efforts have been known in the Citigroup’s inner circles as “Project Bora Bora”.

Fraser, off late, has been facing mounting pressure to fix Citigroup. The American multinational investment major has been an under performer in the financial market, compared to its rivals.

After Fraser taking over in early 2021, Citi’s stocks have been trading at a price-to-tangible book value ratio of 0.49, less than half the average of its United States peers and one-third the valuation of top performers including JPMorgan Chase.

“The only thing she can do at this point is a really substantial headcount reduction. She needs to do something big, and I think there’s a good chance it’ll be bigger and more painful for Citi employees than they expect,” remarked James Shanahan, an Edward Jones analyst, while interacting with the CNBC.

The “Project Bora Bora” will be one of Wall Street’s deepest rounds of layoffs in years.

Since the retirement of her predecessor Mike Corbat, Citigroup’s expenses and headcount have ballooned under Fraser. In fact, amid the other American banks downsizing their staffers, Citigroup’s staff levels, by October 2023, remained at 240,000. The venture currently has the biggest banking workforce in the United States, apart from the larger and profitable JPMorgan.

The impacts of Fraser’s plan will come in January 2023 along with Citi’s fourth-quarter earnings.

Fraser Trying Her Best

Citigroup, United States’ third-largest bank by assets, has been plagued with the decades of stock under performance and missed financial targets. To address these, Fraser is now taking steps analysts have long batted for.

She has pledged to boost Citigroup’s returns to at least 11% in the coming years, which, upon the realisation, will help the bank’s stocks to recover in the Wall Street. As per the analysts, Citigroup needs to increase revenue, use its balance sheet more efficiently and cut costs.

Fraser put Titi Cole, Citigroup’s head of legacy franchises, in charge of the reorganization, as per the reports. Cole joined Citigroup in 2020 and is a veteran in the American banking field, as she had successfully served financial organisations like Wells Fargo and Bank of America.

While on boarding Cole’s expertise in helping out an organisation to address their expense and headcount- related problems, Fraser has also sought the support of Boston Consulting Group, to map out Citi’s organization charts, tracking key performance metrics and making recommendations.

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