Citi undergoes its most significant restructuring in twenty years, with the elimination of two core departments, potentially leading to a large number of layoffs.

Citigroup CEO Jane Fraser is restructuring the company in an effort to reverse the long-standing decline in its stock price, while also preparing for a wave of layoffs.

According to a statement released on Wednesday, September 13th, Citigroup will now operate five business divisions and will no longer have three regional heads overseeing its operations in approximately 160 countries and territories worldwide. At least four of Fraser's senior deputies have been given new positions in this restructuring, and Citigroup is searching for a banking chief to oversee departments including the investment banking division.

Fraser referred to this restructuring as the most significant one in Citigroup's twenty-year history. The company will abandon its two long-standing core operating divisions, one focused on institutional clients and the other responsible for its consumer products. Citigroup will now focus on five major operating divisions, including the service division, trading division, U.S. consumer banking division, banking division, and wealth management division.

According to sources cited by the media, these restructuring measures will result in a significant number of layoffs, although the company has not yet determined how many employees will be affected. Citigroup has already laid off a total of 5,000 employees this year.

Fraser stated:

These decisions were not made lightly. We will bid farewell to some very talented and hardworking colleagues who have made important contributions to our company.

Since Fraser took office in early 2021, Citigroup's stock has fallen by approximately 40%, more than double the decline of its major Wall Street competitors during the same period.

On Wednesday, Citigroup's stock price rose by 1.66%.

Fraser stated:

I know many of you are as frustrated as I am that we, as a bank, are undervalued. These changes in how we operate will accelerate our journey to becoming a successful bank.

As part of its efforts to adjust the size of the top two layers of management, Citigroup has reduced positions related to back-office functions by 15%. These measures are part of the bank's goal to reduce the efficiency ratio, which measures the cost of generating one dollar of revenue, to below 60% in the medium term.

Fraser has been seeking to streamline Citigroup's vast global operations. For years, the company has been exiting consumer banking businesses in more than a dozen countries.

Fraser stated:

We are now serving customers in a more targeted way. This allows us to eliminate unnecessary complexity that was built for an organization that is very different from our bank today.