Citigroup reorganization to be completed in first quarter, CFO says

(This Dec. 6 story has been corrected after Citigroup clarified that the $1 billion figure does not relate only to the reorganization recently announced in paragraphs 1, 2, 3 and 6)

By Tatiana Bautzer and Niket Nishant

(Reuters) - Citigroup Chief Financial Officer Mark Mason said the company will book $1 billion in costs that include restructuring and severance this year.

The company's sweeping reorganization is expected to be fully completed by the end of the first quarter next year, Mason told the Goldman Sachs U.S. Financial Services Conference. The changes include slimming down management and potentially laying off thousands of employees.

The $1 billion includes $600 million of severance during the first three quarters of the year and the remainder in the fourth quarter, according to the company.

Simplifying the bank's structure will enable it to reduce annual expenses to $51 billion to $53 billion, he added, helping Citi to approach its profit targets.

The bank maintained its estimate for 2023 expenses at $54 billion, excluding a special assessment from the Federal Deposit Insurance Corp. of about $1.65 billion.

Restructuring charges of "a couple hundred million dollars associated with the org simplification" are expected in the fourth quarter, Mason said.

The bank aims to reach a medium-term return on average tangible common shareholders equity of 11% to 12% in the medium term after the reorganization. ROTCE is a measure of company performance.

Citi's full-year revenue in 2023 will probably come in at about $78 billion, the lower end of its previous forecast, Mason said.

Mason cited Argentina as a factor reducing Citi's revenue.

"The Argentina elections for example, that is going to put pressure on revenue for a couple of hundred million dollars," he said. "Thinking about the currency impact, that's the cost of us doing business there."

REORGANIZATION

Citi announced the latest phase of its sweeping reorganization last month, trimming leadership and moving executives within divisions. The bank is reducing management layers from 13 to eight as part of its biggest overhaul in decades.

CEO Jane Fraser aims to reduce bureaucracy and increase profits while boosting the company's stock, which lags its peers. "We need to change how we run Citi in order to truly transform it once and for all," Fraser told analysts on a third quarter earnings call in October.

The third-largest U.S. bank by assets beat estimates for third quarter profits, driven by rising trading revenue, investment banking fees and interest payments.

(Reporting by Tatiana Bautzer in New York and Niket Nishant in Bengaluru, editing by Lananh Nguyen, Chizu Nomiyama and Nick Zieminski)