Citigroup Dips 3% on Reports of 1,000 More Job Cuts This Week
The latest staff reduction is a key part of CEO Jane Fraser's sweeping multi-year overhaul aimed at streamlining the global banking giant and boosting profitability.
Citigroup Inc. (NYSE: C) shares fell nearly 3% in trading on Tuesday following reports that the bank is set to eliminate approximately 1,000 more positions this week. The move marks another significant step in the company's comprehensive global restructuring initiated by Chief Executive Officer Jane Fraser to simplify operations and close the profitability gap with its rivals.
The stock traded down to $117.70, a decline of 2.98% on the day, chipping away at recent gains that had pushed the shares near a 52-week high of $124.17. Despite the day's downturn, the market's reaction appears muted, suggesting that investors largely anticipated further cuts as part of the bank's well-publicized corporate overhaul.
The staff reductions were first reported by Bloomberg, and are a component of the most significant restructuring at the New York-based financial institution in over a decade. The multi-phase plan, internally dubbed "Project Bora Bora," aims to dismantle the bank's complex two-division structure, replacing it with five core business lines that report directly to the CEO. The goal is to strip out layers of management, accelerate decision-making, and ultimately improve accountability and returns.
With a market capitalization of over $223 billion, Citigroup has long traded at a discount to its peers, partly due to its more complex structure and lower profitability. The bank's stock currently trades at approximately 1.12 times its book value, a key valuation metric for financial institutions. The ongoing overhaul is Fraser's direct answer to this long-standing shareholder concern, targeting improved efficiency and a higher return on tangible common equity (ROTCE).
Wall Street has been closely watching the execution of this turnaround strategy. While the human cost is significant, analysts have largely viewed the aggressive restructuring as a necessary, albeit painful, step. The consensus rating on the stock remains positive, with 17 of 22 analysts tracked by market data firms rating it as a "Buy" or "Strong Buy." The average analyst price target sits at $131.33, implying further upside from its current levels.
The trend of workforce reduction extends beyond Citigroup within the financial sector. On Monday, BlackRock, the world's largest asset manager, also announced it was cutting about 1% of its staff, signaling a broader industry-wide push for cost discipline amid a shifting economic landscape.
For Citigroup, the completion of these job cuts will conclude a major phase of its reorganization. The focus for investors and management will now shift more intensely toward demonstrating tangible financial benefits from the new, leaner operating model. Future earnings reports will be scrutinized for improvements in efficiency ratios and progress toward the firm's medium-term ROTCE targets. More details on the financial impact of the restructuring are expected to be provided in the bank's upcoming quarterly earnings release.
According to its official corporate profile, Citigroup is committed to leveraging its global network and digital capabilities to drive growth. The success of Fraser's ambitious overhaul will be critical in determining whether the banking giant can finally achieve the sustained profitability its scale suggests is possible.