Sources claim that managers and consultants involved in Citigroup CEO Jane Fraser’s reorganization have talked about at least 10% employment cutbacks in a number of significant companies.
According to them, Fraser’s attempt to fire co-heads, regional managers, and other employees with overlapping duties will result in layoffs for executives that go over 10%.
Workers are uneasy about the corporate makeover, which is internally referred to as “Project Bora Bora.”
It’s early in the talks, so the figures could change in the next weeks.
A wave of panic swept through many of the 240,000 employees of Citigroup when CEO Jane Fraser revealed in September that her massive business reform would result in an unknown number of layoffs.
She sent out a memo announcing, “We’ll be saying goodbye to some very talented and hard-working colleagues.”
Employee worries are well-founded. According to persons with knowledge of the process, managers and consultants working on Fraser’s reorganization, called internally as “Project Bora Bora,” have proposed at least 10% job cutbacks in several important businesses. It’s early in the talks, so the figures could change in the next weeks.
Fraser is facing increasing pressure to turn around Citigroup, a multinational bank whose management problems have plagued three of its predecessors since 2007. Fraser took over the bank in early 2021, and since then, it has lagged behind competitors in every statistic that important to investors. With a price-to-tangible book value ratio of 0.49, it is valued at one-third that of top performers, such as JPMorgan Chase, and less than half that of its US rivals.
In an interview, Edward Jones analyst James Shanahan stated, “A really substantial headcount reduction is the only thing she can do at this point.” She needs to take significant action, and I believe there’s a real risk that it will be more severe and traumatic for Citi staff members
In the upcoming weeks, as the big project progresses from management levels to rank-and-file personnel, the final number of layoffs will be established. However, some elements are already evident, according to those discussing the secret project who wished to remain anonymous. According to them, Fraser’s attempt to fire co-heads, regional managers, and other employees with overlapping duties will result in layoffs for executives that go over 10%.
According to one of the people with knowledge of the issue, chief administrative officers and head of staff across Citigroup will be trimmed this month.
According to Pierre Buhler, a banking expert with SSA & Co., investors will likely need to see expenses gradually decline before being persuaded, even if Fraser announces a significant workforce cut. This is a result of the industry’s history of declaring expense plans just to watch as costs escalate.
Nevertheless, Fraser and her deputies must approve the entire strategy; they may decide not to place as much emphasis on cost savings. According to a current executive, the project’s main goal is to eliminate pointless layers so that Citigroup can provide better client service.
The bank has only stated in public that expenses would begin to decline in the second half of 2024.
Beyond making this announcement, Citigroup declined to comment.
A spokesperson stated, “As we’ve previously stated, we are committed to delivering the bank’s full potential and meeting our commitments to our stakeholders.” “We’ve acknowledged that the steps we’re taking to reorganize the firm involve some tough, important decisions, but they’re the right steps to deliver the plan we shared at our 2022 Investor Day and align our structure to our strategy.”
