Citigroup (C) has started trimming staff as part an ongoing reorganization, saying in a statement, "the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but we believe they are the right steps." These cuts consist of about 300 senior managers, according to a report from Bloomberg. Citigroup CEO Jane Fraser announced in September her plan to restructure and slim down the banking giant. Yahoo Finance Senior Reporter David Hollerith explains the layoffs and what lies ahead for Citigroup.
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- Citigroup making its latest round of job cuts, 300 senior managers are out. David Hollerith is here with the details. David.
DAVID HOLLERITH: Josh, so the bank issued a statement Monday morning, saying the actions we're taking to reorganize the firm involve some difficult consequential decisions, but we believe they are the right steps. So this round of layoffs is part of a sweeping reorganization effort that CEO, Jane Fraser, laid out in September, which aims to ultimately simplify the bank to improve profitability.
Now, Citi has maintained about 240,000 employees for the past four quarters and this particular reduction, as you pointed out, focuses on eliminating middle management layers. So according to Bloomberg, that comes into roughly 300 senior manager roles, which translates to about 10%-- a 10% reduction at that level. The reduction of those managers is also seen to cause ripples of more layoffs across the organization for as much as 10% in some parts of the organization.
Now this being that some people below the people who were laid off have lost their reports and in such a way their direct business line. And an internal memo, Citi's Fraser said to employees today, no question, these are the proverbial hard yards. So in parallel to this the bank has also been selling off parts of its consumer business across the world.
This has been In regions, including Australia, Bahrain, Vietnam, and most recently, which was announced over the weekend Indonesia. So some of today's cuts can be read as adjustments in support staff as a result of Citi shrinking its international consumer businesses.
CFO Mark Mason is going to say more about this when he speaks at a Goldman Sachs conference the beginning of December. But all told the actual data of what these layoffs will mean, we won't know until sometime early next year.
- Well, David, in terms of what they'll mean we-- but we do know, sort of, maybe a little bit, what Jane Fraser is aiming for here, right? So can you put this in context for us here what this-- in terms of bigger plan for the bank?
DAVID HOLLERITH: Sure, yeah. So I think it's fair to say since around the late-- or I guess you would say early 2010s, Citi has struggled with profitability and they've had a number of regulatory issues too. And in general, the bank is very complicated and it's known to have a really broad international presence.
So CEOs in the past have tried different things to make Citi a little bit more efficient, a little bit more profitable. And since Fraser has come in, really the effort has been about simplifying it and getting out of some of these international consumer businesses, which are not as profitable.
She's also splitting up the two broad divisions of the bank into five different divisions, each of the top of those divisions will report directly to her. So in a way, it's a way to reimagine Citi that sort of shows profitability more transparently and ideally this is something that shareholders will want.