Banks scramble to find leaders equipped for economic realities
Almost 40 years ago, American finance operated in an environment of high inflation and high interest rates, like the current economy. Since most current executives were born during the era of easy money, they are unfamiliar with the complexities of running a bank today.
As financial institutions begin to accept that interest rates will likely remain high for a while longer, they are scrambling to find leaders who can handle such an unpredictable environment. It is becoming increasingly common for CEOs to decide to make drastic, expensive, and often unpopular institutional changes in order to stay competitive.
Citigroup CEO Jane Fraser announced last week that the bank will restructure its leadership, increase accountability, and boost its stock price (Citi shares are down about 11.6% since the beginning of the year).
Fraser said the changes will not be popular with staff and include “very uncomfortable” layoffs.
Reorganizations in banking at the top level are becoming more common. Citigroup is a part of this trend.
Reuters reported last week that Wells Fargo’s CFO, Mike Santomassimo, expects more layoffs; the bank has already cut about 40,000 jobs since 2020.
Truist recently announced plans to cut costs by $750 million, including layoffs and a reorganization of senior management. C.S. Venkatakrishnan, CEO of Barclays, told CNBC last week that the bank would cut hundreds of jobs, as a result of a broader industry trend.
Earlier this year, Goldman Sachs announced plans for a significant reorganization, combining investment banking and trading.