Citigroup to exit distressed debt business

investmentnews.com:

Citigroup Inc. has decided to exit the distressed-debt trading business, the latest retrenchment in Chief Executive Officer Jane Fraser’s effort to reshape the firm in pursuit of higher returns.

The move, described by people briefed on the matter, will remove one of the key players in distressed-debt markets, and follows a recent decision by the New York-based bank to get out of municipal bond trading and underwriting. 

Closing the distressed-debt business, run by Pat Kris and Joseph Beggans. will impact roughly 20 positions, one of the people said, asking not to be identified because this information isn’t public. A company spokesperson declined to comment. 

Fraser announced in September that she is undertaking the biggest restructuring of Citigroup in decades to make the company more efficient and eliminate layers of management within the bank’s 240,000-person workforce. The firm has repeatedly abandoned or missed targets over the years, and Fraser is determined to restore investor confidence in the company’s ability to set and meet guidance.

She was named CEO at Citi three years ago — a historic move making her the first woman atop one of the US banking giants. Since then, investors and analysts have kept close tabs to see how she goes about trying to revive the fortunes of the industry’s original behemoth. That’s a task her immediate predecessors left incomplete after the bank was left hobbled following the 2008 financial crisis and one where Fraser has little margin for error.

Distressed trading can be volatile, with outsized performance one year potentially followed by leaner times. The business at Citigroup outperformed in 2021 and slowed significantly in the two years after that, two of the people said. 

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