Citigroup Launches Three-Phase Plan to Overhaul Operations and Returns

Citigroup executives Wednesday (March 2) unveiled a three-phase plan they say will streamline the banking conglomerate’s operations and improve return rates for customers, according to a Barron’s report that added investors seemed leery about the pace of the proposed changes.

CEO Jane Fraser, who took the Citigroup helm about a year ago, said while she understands the implementation and execution of the plan won’t be easy, it’s important for the bank to be focused on the future rather than trying to correct mistakes of the past.

“Frankly it is not a surprise that we’ve been outperformed by peers,” she said on a call with investors and analysts, according to Barron’s. “Everybody listening today knows this isn’t a quick fix. This is a multi-year journey.”

Citigroup plans to invest in technology and financial controls to help it become leaner and more profitable as part of its three-pronged transformation. Costs are expected to rise by 5% to 6% this year, per the report.

The bank expects expenses to “normalize over the next few years” as it targets an efficiency ratio of 60%, down from 2021’s rate of 65%.

In phase one of Citigroup’s plan, it will address investing in technology and digital client solutions. Phase two, which is set for three to five years from now, will target a return on tangible common equity of 11% to 12%.

Finally, phase three will bring about a leaner Citigroup with normalized expenses after an extended investment in transformation.

Earlier this week, Citigroup said that its total exposure to Russian assets was at $5.4 billion at the end of December 2021, accounting for 0.3% of the banking giant’s assets last year and down slightly from three months earlier.

Related: Citigroup’s Russian Exposure at $5.4B

Citigroup also noted in a regulatory filing that it could see blowback from rising tensions between the West and Russia in the wake of Russia’s invasion of Ukraine.

The bank is monitoring the “situation and economic conditions and will mitigate its exposures and risks as appropriate,” according to the filing. Citigroup’s total third-party exposure in Russia was almost $8.2 billion at the end of 2021.