Citigroup's curious restructuring: "Chairs moved around"
Jane Fraser's plan is progressing. Two months after declaring her preparedness to remove "bystanders" and a few weeks after explaining that this means reducing management layers from 13 to eight and eliminating pointless meetings, last week's changes at Citi brought a bit of clarification about what comes next. However, insiders say it also introduced some new confusion.
After naming Tyler Dickson the sole head of investment banking in September, Citi last week unveiled Dickson's reports along with a raft of other appointments relating to its new geographical cluster structure (Europe, UK, Latin America, Middle East and Africa, Asia South, Asia North and Australia, and Japan) beneath Ernesto Cantu.
In Dickson's team, Jens Welter, whom Citi hired from Credit Suisse in 2022, is becoming the new head of UK and EMEA investment banking. John Chirico is becoming the new, sole, head of North America investment banking. Jan Metzger is becoming the new head of banking in APAC.
However, as it slims down reporting structures and does away with co-heads, Citi isn't actually dismissing any of the former co-heads it doesn't want. It's keeping them on, but in non-managerial roles. In Europe, therefore, Nacho Gutiérrez-Orrantia, the Citi incumbent, with whom Welter was previously co-head, is floating (voluntarily we understand) into a bigger role as head of 'banking' broadly and becoming cluster head for the region. In America, Kevin Cox, who was previously co-head with Chirico, is staying on as chairman of the global industrial group. There are others too.
If the restructuring was supposed to cut costs, it therefore doesn't seem to be doing so. Instead, expensive senior people who were doing one sort of job have simply moved into another, likely on the same pay. "This seems to have been a way of reorganizing themselves into a group that vaguely resembles what Jane wants but without anyone actually leaving," says one senior Citi banker outside the top team. "It's just chairs being moved around."
This may not matter. Fraser's reorganization isn't just about upfront cost-cutting, but making the organization more efficient for the future. By slimming down reporting lines but keeping senior people with a wealth of contacts and experience in client-facing chairman roles, some in the bank argue that it has achieved the best of both worlds.
The big question, though, is what happens to Citi's array of co-heads one or two notches further down. Hypothetically, Fraser doesn't like co-heads (even though last week's announcement also included the revelation that James Fleming and Doug Adams will co-head equity capital markets globally). If former co-heads are being kept on at level two, does this mean co-heads will survive at levels three and four too?
Plenty of people inside Citi will be hoping so. Citi has long favored co-head structures, and they're everywhere in the investment bank. Take JP Petard and Greg Dalle in EMEA industrials, Robin Rousseau and Barry Weir, who lead M&A in Europe or the likes of Liz Milonopoulos and Brian Yick, who run internet banking in the US. As Citi managing directors await the next raft of revelations, the hope is that the bank will stay kind and that everyone will stay aboard. This may be difficult. "I'm pretty sure we have three co-heads for some teams," the senior banker reflects.
Ultimately, Fraser may hope that senior people who are relegated to chairman roles leave of their own accords. Laying off top bankers with long tenure can be expensive. Some are going already: as we reported last week Shreyas Bordia, Citi's head of EMEA energy investment banking, quit voluntarily for something new and as yet mysterious before even waiting to find out where he sits in the new structure.
It's not clear when Citi will disclose the direct reports of Welter, Chirico and Metzger, but the next announcement promises to clarify things. In the meantime, insiders at the bank say there's some confusion about the new reporting lines because all the sector and product group heads in investment banking report directly to Tyler for their respective global franchises, implying that the regional heads' powers might be limited. "In the old world, the geographical entity had all the power. Now, it's the sector teams that have priority," says the banker.
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