Citigroup is planning a massive overhaul of its business that will involve job cuts, in one of the biggest organizational restructurings the bank has experienced in about two decades.。

Citi said in a statement on September 13 that the bank, which previously had three regional heads overseeing its operations in about 160 countries around the world, has now been transformed into five business units, including services, trade, personal banking, banking and wealth management.。

Shahmir Khaliq will be in charge of services, Andy Morton will be in charge of transactions and Gonzalo Luchetti will be in charge of US personal banking.。Peter Babej will temporarily lead the banking business, while the wealth unit will be led by Andy Sieg, Merrill's former head of wealth management, who will take up his post later this month.。In addition, all non-North American operations are integrated by Ernesto Torres Cantú, Citi's international director.。

Leaders across business units will report directly to Citigroup CEO Jane Fraser, a move aimed at speeding up management decisions and increasing employee accountability。

"We need five business leaders sitting at my table, fully involved in the way our company operates and the key decisions we make every day."。In a memo to employees on Wednesday, Fraser said, "We need a structure that has fewer layers and clearer, more direct decisions."。After the reform, Fraser's executive management team had 19 people.。

In addition, Citi will abandon its two long-standing core operating units, one focused on institutional customers and the other on the company's consumer products.。Paco Ybarra, previously in charge of the institutional account team, will remain in Fraser's executive management team as a senior consultant until his retirement next year.。He will focus on Citi's generative AI work。In addition, Citi has eliminated 35 different internal committees to reduce bureaucracy within the company.。

The full restructuring will also involve layoffs.。

A person familiar with the situation has confirmed that there will be layoffs, but it is unclear how many employees will be affected.。Citi employees will know by the end of November if their roles have changed.。Since the beginning of this year, Citigroup has laid off thousands of employees。Currently, Citigroup has about 240,000 employees.。Fraser said: "With Citi rapidly transitioning to the new model, the company is committed to retaining top talent and supporting employees who are leaving the company.。"

Fraser said the reform move was driven in part by a desire to make managers more accountable for improving returns, which Citigroup has long lagged behind its peers.。To that end, she said, the company has eliminated most of its previous co-heads who were responsible for running some of its largest and most important businesses.。

"While I believe the steps we are taking will simplify the organization and improve our competitiveness, they will cause people to change roles or leave our company," Fraser wrote in a memo to employees.。"

Mike Mayo, an analyst at Wells Fargo, said in a note to clients: "The risk of such moves is always unwelcome departures and internal conflict, especially given Citi's history.。"

Brian Mulberry, client portfolio manager at Zacks Investment Management, which owns Citi shares, said: "Citi will cut unproductive management and restructure with a flatter structure, which will definitely save money on its balance sheet.。"

Fraser added: "We've made tough decisions here.。These decisions will not be universally popular with our banks。It would make some of us feel very uncomfortable。I totally agree with that。She added: "I am confident that our best performing employees will fully support these initiatives and that this is absolutely the right thing to do for our shareholders."。"

Fraser joined Citigroup in 2004。During her career at the bank, she helped execute a number of divestitures, including the installment sale of the American brokerage business.。and is often assigned to solve problems in the bank's operations, from the U.S. mortgage business to the Mexican business。She took over as CEO in March 2021, taking the helm of the nation's third-largest bank, and she has been trying to help Citi with its transformation.。

The impetus for the transformation comes from the company's lagging performance.。Earlier, Citi disclosed its second-quarter 2023 results, with data showing that its net profit fell 36% in Q2 to just $2.9 billion.。Over the past year or so, the bank has been severely affected by rising interest rates and tighter financial conditions, with its shares down 46% from their peak at the end of 2021.。

There are also investors who don't buy Fraser's sweeping reforms and are skeptical that these changes will succeed。However, more investors are taking a wait-and-see attitude.。

On the stock market side, the reaction to the reform package has not been very intense either。Citigroup shares rise less than 2% shortly after restructuring announcement。