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Citigroup reorganization to be completed in first quarter, CFO says – Reuters

The Citigroup Inc. (Citi) logo is seen at the SIBOS Banking and Finance Conference in Toronto, Ontario, Canada, October 19, 2017. The photo was taken on October 19, 2017. REUTERS/Chris Helgren/File Photo Obtaining license rights

Dec. 6 (Reuters) – (This Dec. 6 article notes that the $1 billion figure pertains only to recently announced reorganizations in paragraphs 1, 2, 3, and 6. (This was corrected after Citigroup clarified that this was not the case.)

Citigroup (CN) Chief Financial Officer Mark Mason said the company will record $1 billion in costs this year, including restructuring and layoffs.

Mason told Goldman Sachs (GS.N)'s U.S. Financial Services Conference that the company's major reorganization is expected to be fully completed by the end of the first quarter of next year. The changes include slimming down the management team and potentially laying off thousands of employees.

The company said the $1 billion includes $600 million in severance payments for the first three quarters of this year and the remainder of the fourth quarter.

He added that simplifying the bank's structure would reduce annual expenses to $51 billion to $53 billion, helping Citi move closer to its profit goals.

The bank maintained its 2023 cost estimate at $54 billion, excluding a special assessment of about $1.65 billion from the Federal Deposit Insurance Corporation.

Mason said the company expects to incur “hundreds of millions of dollars in restructuring costs related to organizational simplification” in the fourth quarter.

After the restructuring, the bank aims to achieve a medium-term return on tangible common equity of 11% to 12% on average over the medium term. ROTCE is a measure of corporate performance.

Mason said Citi's full-year sales for 2023 will likely be about $78 billion, at the lower end of his previous forecast.

Mr Mason cited Argentina as a factor in reducing City's revenue.

“The Argentine elections, for example, will put hundreds of millions of dollars in revenue pressure,” he said. “Given the currency impact, that's the cost of doing business there for us.”

Reorganization

Last month, Citi announced the latest phase of a sweeping reorganization, with leadership cuts and executive changes within the division. The bank is reducing its management layers from 13 to eight as part of its biggest overhaul in decades.

Chief Executive Officer Jane Fraser aims to cut bureaucracy and increase profits while boosting the company's stock price, which has lagged behind peers. “To truly transform Citi once and for all, we need to change the way Citi is run,” Fraser told analysts on a third-quarter earnings call in October.

The third-largest U.S. bank by assets beat expectations for third-quarter profit, helped by higher trading revenue, investment banking fees and interest payments.

Reporting by Tatiana Bautzer in New York and Niket Nishant in Bengaluru; Editing by Ranan Nguyen, Chizu Nomiyama and Nick Zieminski

Our standards: Thomson Reuters Trust Principles.

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Tatiana Bautzer is the U.S. banking correspondent for Reuters in New York. She previously covered Brazilian banks, covering the latest news on transactions, initial public offerings and bankruptcies by the world's largest companies. She has also delved into corruption scandals at Brazilian conglomerates and business disputes among billionaires. Before she joined Reuters in 2015, Ms. Bautzer worked at the business magazines Exam and Istoe Diñeiro, and the newspapers Valor Economico and O Estado de São Paulo. She previously served as international correspondent for Barrow Economico in Washington, DC, covering multilateral institutions and trade. Bautzer holds a bachelor's degree in journalism and her MBA from the University of São Paulo. Contact: +646-2397968

Niket Nishant reports on the latest news and quarterly earnings from Wall Street's biggest banks, card companies, financial technology startups, and asset managers. We also cover his largest IPO on a US exchange and late-stage venture capital funding, along with crypto industry news and regulatory developments. His work is featured in the Finance, Business, Markets and Future of Money section of the website. He graduated from the Indian Institute of Journalism and New Media (IIJNM), Bangalore.

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