A Citigroup reorganization aimed at streamlining the bank and making it more competitive with its peers has gone swifter than expected, Chief Executive Jane Fraser said, as she set out positive guidance for the year ahead.
“We’re not going to make the mistakes we’ve made in the past,” she said at the RBC Capital Markets Global Financial Institutions Conference in New York on Tuesday, where she also reaffirmed the bank’s expense guidance for the year ahead. “We’re getting this done.”
Fraser has been under close scrutiny after initiating what’s billed as the largest restructuring of Citigroup in decades, designed to propel the firm from a banking underdog to one competitive with its more profitable peers. The bank said it would cut 20,000 roles in its bid to boost returns.
With the moves, the company has shifted to focus on five key businesses: trading, banking, services, wealth management and consumer offerings. The reorganization simplifies the bank’s structure and, with clearer reporting lines, it means “there’s nowhere to hide” for anyone when it comes to accountability — including Fraser herself, she said.
Citigroup shares gained as much as 2.5%, and were up 0.25% to $56.25 at 3:15 p.m. in New York.
“On the corporate side, sentiment is definitely improving,” Fraser said, adding that more announcements for mergers and acquisitions are a good indicator for its banking unit, despite fewer closed deals. She said activity in debt capital markets is also “extremely active,” while equity capital markets and the hedge fund world are slower.
As a result, Fraser said investment-banking revenue should be up by a percentage in the low teens compared with the last quarter of 2023, while the Wall Street giant will likely see revenue in its markets division fall by 8% to 12% in the first quarter from its strong performance a year earlier.
The expected increase in investment-banking revenue comes amid greater confidence among much of the market that interest rates will start to fall this year, which would ease financing costs for dealmakers and could produce windfall fees for banks. Citigroup recently announced it was hiring Viswas Raghavan from JPMorgan Chase to lead its newly formed banking division, a unit that’s shrunk in recent years even as the rest of the company has grown in revenue.
Fraser also said that European clients are still bearing the brunt of higher energy and labor costs, leading to concerns around their competitiveness.
“The U.S. just feels more on the front foot,” she said.
Expenses for the quarter are set to be slightly above $14 billion, excluding any special assessment charges, with cost of credit about $2.7 billion, Fraser said. She reiterated the bank’s full-year guidance for expenses of $53.5 billion to $53.8 billion.
Todd Gillespie, Bloomberg , 2024-03-06 15:03:03
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