- Citigroup, which was once the world’s largest financial institution, has announced plans to cut 20,000 jobs by 2026, showing how far the bank has fallen from its peak and ongoing struggles to simplify its business.
- Citigroup ballooned in size through mergers and acquisitions under former CEO Sandy Weill’s “financial supermarket” model, but the sprawling company proved unwieldy, especially after the 2008 financial crisis damaged it.
- Current CEO Jane Fraser is attempting to streamline Citigroup by exiting non-core businesses, splitting it into distinct units, and cutting 20,000 jobs to save $2.5 billion annually, though it will hurt morale.
Citigroup, once the world’s largest financial institution, has unveiled plans to cut 20,000 jobs by 2026. This move shows how far the mighty bank has fallen from its peak and its ongoing struggles to simplify its business.
Citigroup’s Long History of Growth Through Acquisitions
Citigroup was formed in 1998 through the merger of Citicorp and Travelers Group. This deal, engineered by CEO Sandy Weill, created a financial services behemoth offering banking, insurance, investments and more. Weill pursued a “financial supermarket” model, snapping up companies to expand Citigroup’s product lines.
The 1998 merger cemented Citigroup as the world’s largest financial services firm. But the sprawling company proved unwieldy. The 2008 financial crisis further damaged Citigroup, leaving it bloated and directionless.
Recent Attempts to Streamline
CEO Jane Fraser, who took over in 2021, aims to simplify Citigroup by focusing on its core businesses. She has already sold or announced plans to sell 14 consumer banking units abroad. Citigroup is also exiting U.S. retail banking and its municipal securities division.
20,000 Job Cuts Part of Major Reorganization
The 20,000 job cuts announced January 13 are part of a broader reorganization Fraser unveiled last fall. She is splitting Citigroup into five distinct business units to improve efficiency and agility.
Fraser warned when announcing the reorganization that it would mean losing talented employees. The bank has already cut around 300 senior managers as the first round of layoffs.
The Coming Shake-Up
Citigroup expects its workforce to shrink from 240,000 currently to around 180,000 by 2026 through job cuts and divestitures. This would give Citigroup the smallest staff among the four biggest U.S. banks.
The cuts aim to save $2.5 billion in costs annually. But Fraser acknowledges they will hurt morale. She maintains they are necessary to execute Citigroup’s new strategy focused on its core strengths.
The job reductions represent the most significant organizational change at Citigroup in decades. They underscore the bank’s decline from its peak size and reach. While painful, Citigroup hopes this shake-up will help revive its fortunes.