Citi wouldn’t reveal the number of jobs that will be lost in the process, but Wall Street’s most powerful woman predicted employees would find many of the changes “very uncomfortable.”

“We’ll be saying goodbye to some very talented and hardworking colleagues,” she said in a memo to staff obtained by CNBC.

Citi’s vision of capitalizing on its global footprint to become the leading financing partner for corporates with cross-border investment and trading needs may play to its strengths, but it’s been a flop for investors.

It remains the only one of the four large-cap U.S. banking stocks to trade materially below its pre-pandemic price, with the share price falling more than a third during her brief tenure.

“I know many of you share my frustration that we are seriously underestimated as a bank,” Fraser wrote to colleagues, billing the move as the “most consequential” change to the way Citi is run in nearly 20 years. 

Elevated to CEO in March 2021, her first course of action the following month included the exit from 13 retail banking markets. On her one-year anniversary, Citi unveiled its strategy to profit from global trade flows while bulking up in wealth management, a lucrative, fee-driven business with low regulatory capital burdens. 

By comparison, rivals JPMorgan, Bank of America, and Wells Fargo have carved up much of the U.S. retail market that has long been a cheap and sticky source of funding. The trio have two (if not three) times the domestic customer deposits of Citi, and JPMorgan posted record second-quarter profits thanks to its acquisition in May of California regional lender First Republic.  

Citi lost track of costs, leading to ‘worst-in-class efficiency’

Veteran bank analyst Mike Mayo, a managing director at Wells Fargo, said Citi had gotten some important calls right of late, with the lowest exposure to commercial real estate and a higher-quality loan book that allowed it to skirt warnings by credit rating agencies in August. 

“I don’t see the big hole [in their balance sheet],” he told Bloomberg Television last week. Yet he says Citi has a key weakness, which Fraser’s reorganization might finally address: “When it comes to costs, they have worst-in-class efficiency.”

Organizational changes often seem like inside baseball: Citi for example is swapping two main divisions for five business lines. Yet they are invariably a very public sign that something has clearly gone wrong—not necessarily with a company’s strategy, but rather in the execution of that strategy. 

Much like a military commander shifts forces on the battlefield, resources need to be deployed differently in order to achieve the mission. That also means every restructuring has its own winners and losers with lines of reporting changing, products scrapped, and offices closed.

With the addition of five new direct reports to Fraser, her new executive management team now grows to 19 members. That’s two more than JPMorgan, a bank whose balance sheet boasts twice the assets of Citi with a market cap five times its size.