What kind of person has been eliminated from Citigroup in the 7,000 net job cuts from the bank in the first quarter? 🤔
Get Morning Coffee☕in your inbox. Sign up here.
It seems that the average person let go was around junior vice president level, or below (depending upon division). Citi CFO Mark Mason said today that the bank expects to make annualized run rate savings of $1.5bn a year from those 7,000 job cuts. This means the bank was spending an average of no more than $214k on each of those people, including employer's taxes.
The implication is that as Citi stripped out five layers of management and halved its internal governance committees, most of the people disassociated from their jobs were comparatively junior. As we've noted before, at the top of the hierarchy many heads of division were retained as "chairmen" in their business areas.
Citi CEO Jane Fraser said today that the cuts were "the most consequential set of changes" Citi has made, and that they've enabled both her and Mason to run the bank like "operators" instead of people running a holding company. "It's much easier to get things done," she added.
Cutting juniors is perhaps inevitable given the pyramidal structure of banking hierarchies and the fact that Citi wants to remove 20,000 people by 2026. However, the cuts are equally a reminder that even when a bank is explicitly trimming its 'management hierarchy', it's more junior staff who are often most affected.
Citi also said today that it spent $258m on "repositioning costs" as it cut the 7,000 people, implying that severance payments were more than $37k each.
Citi's layoffs aren't over. The bank wants to cut 20,000 people in total, and so has 13,000 still to go, of which 5,000 are expected to come from business divestments and the remainder are expected to come from technology and support teams.
This doesn't mean there won't be more cuts in the investment bank. Some teams are likely to be safe, though. Citi said today that prime services revenues are thriving. It's also focusing on technology, healthcare and industrials sector teams in investment banking, which it says now account for a combined 50%+ of its banking revenues.
Have a confidential story, tip, or comment you’d like to share?Contact: +447537 182250 (SMS, Whatsapp or voicemail).Telegram: @SarahButcher.Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)
