Since taking over the business in September, Andy Sieg has quickly risen to prominence in Citi’s struggling assets division. Some of his efforts are paying off, such as promoting investment products for existing customers to reduce reliance on loans and deposits.
But despite the job cuts, the bank reported Friday that the division’s spending rose 3% year over year to $1.67 billion in the quarter. Revenues also decreased 4% compared to the same period to $1.7 billion, mainly due to lower net interest income.
Chief Financial Officer Mark Mason acknowledged on an earnings call that the bank was “not satisfied” with the division’s top performance, but said Sieg’s cost savings would be reflected in future quarterly profits. Ta. Citi has cut 7,000 jobs in recent months and aims to lay off a total of 20,000 people by 2026.
Sieg has previously said his goal is to reduce his division’s annual costs by hundreds of millions. Citi did not say how many employees in wealth management would be affected, but around 10% of the 485 employees in its London office are reportedly facing redundancy. Support staff, private bankers and financial advisors are also included in the layoffs, Mason said on the earnings call.
Chief executive Jane Fraser said other employees had also been given warnings and the department would see headcount reductions in the next quarter.
“Andy took some pretty drastic moves on expenses this quarter,” Fraser said.
Expenses increased in part due to investments in technology, such as making performance reporting easier for customers to use, he added.
There is one bright spot. That’s because the division collects more fees for managing investments such as private equity stocks, and non-interest income rose 14% to $716 million in the past quarter alone. Citi currently manages $515 million in investment assets for high-net-worth clients, an increase of 12% over last year as clients do more business with Citi and market valuations increase.
In late September, Citi promoted Chris Bitterley, head of North American investments, to a new role overseeing global investments. Meanwhile, at least nine wealth executives have retired or resigned since Sieg took over, including Hail Behzadi, head of the North American private bank, who was replaced by Merrill Lynch veteran Don Prowse.
Sieg has prioritized investment products to increase wallet share with existing Citi customers, who have $5 trillion in investable assets held by other banks. According to the Wall Street Journal, adding investment assets makes up a large portion of private bankers’ bonuses.
The remaining underperforming advisors need to step up and take advantage of these services, Mason said.
“We will continue to invest and replace underperforming or underproducing bankers and advisors with resources that can actually generate the returns we expect and take advantage of the client opportunities in front of us,” he said. There will be a need.” .
