Citi mulling further reorganization under CEO Jane Fraser: reports

The news reports cited people familiar with the bank and said the plans have yet to be finalized.

Paco Ybarra, head of Citi’s institutional-clients group, is leaving the company and his position will be eliminated, Reuters reported, citing people familiar with the bank. The institutional-clients group includes treasury and trade solutions as part of its services, as well as markets and banking businesses.

A spokesperson for Citi declined comment.

Odeon Capital analyst Richard Bove reiterated a buy rating on Citi and said the stock remains cheap relative to other stocks.

“Putting [Fraser] in closer contact with operating units gives her an opportunity to assess their business directly,” Bove said. “The fact that this needs to be done after 53 years of reshaping and restructuring is quite frankly very discouraging.”

Instead of using the company’s strengths and cash flow to pursue new ventures, Fraser remains focused on building upon the existing strengths of the company, such as providing core business services and trading capabilities, particularly in foreign exchange, he said.

Looking ahead, Bove predicts Citi will continue to shrink but said it remains “rich in operating skills which are needed … and cash.”

Any further changes at Citi will come after a series of transformational moves at the bank.

Citi ended the second quarter with a head count of 240,000, the same as in the previous quarter, but it’s still shedding jobs that have yet to be officially reported.

Also read: Megabank head count holds nearly steady in second quarter as lenders compete for business

At last check, Citi said it has signed sales agreements for nine of the 14 retail banking markets it plans to exit, including Taiwan, Australia, India, the Philippines, Thailand and Vietnam. Citi is instead focusing on wealth management and commercial banking in its international business.

Citi will realize a regulatory capital benefit of $1.2 billion from closing the sale of its Taiwan consumer business to DBS Bank of Singapore, the bank said on Aug. 14.

It’s also planning to sell its Mexican retail unit, Banco National de Mexico S.A. (Banamex), through an initial public offering in 2025.

Citi CFO Mark Mason said in June that the bank set plans to cut 5,000 jobs in the first half of the year, including its banking and markets units. In the second quarter, the bank funded severance costs for 1,600 people for about $350 million, he said.

The bank has yet to comment on any job cuts planned for the second half of 2023.

Citigroup’s stock was down by 0.4% on Wednesday amid fresh weakness in bank stocks following S&P downgrades in the sector. The stock is down 9.6% in 2023, compared with a 15.1% gain by the S&P 500
SPX
and a 3.7% year-to-date rise by the Dow Jones Industrial Average
DJIA.

Also read: U.S. banks and regional lenders slide across the board as S&P is latest to downgrade ratings