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Citigroup (C) initiated a restructuring initiative on Wednesday, overhauling its organizational structure and laying off employees as part of CEO Jane Fraser's drive to streamline the banking behemoth, in a move aimed at providing a much-needed boost to shareholders.
It is a result of the bank's diminishing financial performance and profitability. The bank's earnings for the June quarter fell 36% year on year, owing to increasing expenditures and credit charges.
Since CEO Jane Fraser took over in February 2021, the stock has lost over a third of its value. They have been the weakest performers by a considerable margin among the four largest US banks during this time period, which also includes JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC).
What Is Included in the Restructuring?
Fraser's initiative aims to streamline Citibank's organizational structure and make it into a smaller organization. The CEO will report directly to the executives of its five business units: corporate and investment banking, wealth management, transaction services, markets, and U.S. consumer banking.
The reorganization attempt might provide stockholders a much-needed lift. Citigroup's stock rose roughly 2% on Wednesday. So far this year, they are down around 6%.
Can a leaner Citi increase its stock price?
Citigroup stock was previously among the most expensive on the market, reaching a high of just about $600 in 2000. With its wealth management services, automated teller machines (ATMs), and credit card options, the corporation helped to pioneer the contemporary banking sector in the late twentieth century.
However, the bank's fortunes quickly changed. After a disastrous merger with The Travelers' Companies (TRV) four years earlier, the corporation split off its insurance business in 2002.Four years later, it bore the brunt of the subprime mortgage crisis of 2007 and 2008, forcing it to write down billions of dollars in bad loans and request a government rescue. Citigroup shares plunged 98% between May 2007 and March 2009, and were still more than 90% below their all-time highs as of September 2023.
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