Squawk on the Street+ Citigroup CEO Jane Fraser

SPEAKER_1 (0:00)

What's on the horizon for financial markets?

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Sara Eisen (0:31)

We are here in Pebble Beach, California, at Citigroup's Tech and Media Conference.

Joining me now is the host of the event, Citigroup CEO, Jane Fraser. Thank you for having us here.

Jane Fraser (0:41)

Thank you very much. It's lovely to have you here.

Sara Eisen (0:43)

I'm looking forward to a lot of good conversation with tech leaders, but I'm happy to talk to you, especially now because you've made a lot of news lately, and announced in the last few weeks this big reorganization, dividing your company into five business units. What's the vision here?

Jane Fraser (0:58)

So as you say, the last two weeks ago, we took the next big step in a very deliberate path that we have at Citi to unlock the value and the potential in the bank. So in the last couple of years, we've set the strategy. We launched the transformation to address the issues that have held us back, both regulatory and operational. This is the next step, which is to put in place the organization's structure that fits with the strategy and the bank we are today and not the financial supermarket we are and that we were in the past. So as I look at it, it strips out.

Indeed.

It strips out a lot of complexity and simplifies the bank. It makes us more agile. And most importantly, it focuses on our clients. It frees up our people to do that and to focus on execution.

Sara Eisen (1:49)

You haven't put a number around layoffs, although you did make it clear that that was very much part of this reorganization. Do you have that?

Jane Fraser (1:59)

We focus on simplifying the bank. So it's much more about eliminating the complexity, flattening the organization, taking out layers, getting easier for people to work together and to deliver to clients. We will give a number in the fourth quarter earnings.

Once we've begun the work all the way through the organization, cascading it down. So we expect to be in a place that all of that exchange will have finished by the end of the first quarter, but we'll be in a place to give the street a better sense on exactly what does it mean, not just in terms of savings, but really how this delivers that simpler organization that we're all looking for.

Sara Eisen (2:36)

That's what I was going to ask because you also didn't put a number on the cost savings here as well. So do you anticipate doing that?

Jane Fraser (2:42)

We will do that. You need to do the work to cascade the different changes that we put in at the top layers all the way through the organization, their material, this is the most consequential organizational change that Citi has undertaken in almost 20 years.

And we need to do the work, bring that all the way down through the organization in an orderly, but paced manner.

Sara Eisen (3:05)

Some might say, what took so long?

Jane Fraser (3:09)

We had to make sure that we had completed the divestitures. As to say, we had been a financial supermarket in the past, hedge funds, private equity, insurance, 50, 60 different consumer franchises. Now it's a much simpler business, focused on the five core businesses that now report directly to me.

And it was once we completed the majority of the divestitures in the consumer franchises that enabled us to do this holistically, once and properly.

Sara Eisen (3:37)

So you said unlocking the value. Is this why you think your share price has lagged over the recent years?

Jane Fraser (3:44)

I came in very clear-eyed into the CEO ship two and a half years ago that my job was to unlock the value in Citi and that this would be a multi-year journey because not only was it focusing the strategy on where we have incredible competitive advantages and making sure that we could deliver the returns that our shareholders expected from that in the medium term, but we also have to address the issues that have held us back over the years. That is not an easy fix.

As you've seen, we have taken very hard decisions and tough decisions over the last couple of years. I'm very proud of progress that we've made. I also know that we've got a long way to go and the steps that we took last week and the changes that we'll make in the next couple of months are very important to unlocking that.