Morning Coffee: Citi explained exactly what happens when it cuts jobs now. Banker makes no apologies for his “golden age” of hiring

efinancialcareers.com:

When you fire somebody, you save the cost of paying them, but you now have the problem of who is going to pick up the work they used to do.  It sounds pretty obvious, but in fact a lot of banks have come to grief over the years by forgetting that the equation has two sides, and that you need to have an answer to the question (even one as simple as “nobody, we’re closing that business line down”) before you make the redundancy announcement.  In the case of Citi’s current reorganisation, CFO Mark Mason has put some thought in, and he spelled it out quite clearly at the Goldman Sachs conference yesterday.

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The full quote from his presentation makes it clear that as Citi de-layers its management and reduces the number of direct reports to its C-Suite, a lot of the work is going to be picked up by....Mason himself:

“Before we announced the reorg, I had an ICG CFO, and a PBWM CFO, and a Latin America CFO, as well as an EMEA CFO and an Asia CFO," Mason declared. «And underneath them they all had CFOs for the five core businesses. By eliminating those roles, those businesses are now sitting at my table, the CFOs for those businesses”.

He notes that as well as getting rid of those roles, Citi has been able to lose the support staff that went with them, so it’s potentially quite a material cost saving.  But he goes on to say that as well as saving money in itself, the reorg is “the efficiency that allows us to run the business more effectively”.  In other words, Mason (and his peers in the C-Suite) can run things better themselves by having direct access to the revenue generating business units themselves.