Citigroup to Close Down Global Distressed-Debt Business: Here's What to Know

By Jace Dela Cruz

Dec 21, 2023 12:33 AM EST

Citigroup Inc. is reportedly closing its global distressed-debt group as it undergoes further restructuring under CEO Jane Fraser's leadership.

People with knowledge of the matter told CNBC that this move aligns with the company's strategy of closing businesses with poor returns to enhance its chances of meeting performance targets set by Fraser. 

The restructuring initiative, known internally as Project Bora Bora, was announced by Fraser in September, marking significant changes in the third-largest US bank by assets.

Citibank To Cut 11,000 Jobs
(Photo : Mario Tama/Getty Images)
NEW YORK, NY - DECEMBER 05: A 'Citi' sign is displayed outside Citigroup Center near Citibank headquarters in Manhattan on December 5, 2012 in New York City.

Citigroup to Close the Distressed-Debt Group

The decision to close the distressed-debt group aligns with Citigroup's broader efforts to streamline its operations and focus on more lucrative areas. 

It comes after last week's announcement that the bank will shut down its municipal bond trading operations, a business with around 100 employees that had faced challenges and experienced a decline in profitability. 

The distressed-debt group, which handles trading the bonds and other securities of companies approaching or in bankruptcy, currently employs around 40 people.

READ ALSO: US, China Risk a 'New Cold War' as Economic and Trade Conflicts Escalate, IMF Official Warns  

Plan of Citigroup to Set up Securities Business in China Faces Delay

In related news, Citigroup is reportedly facing delays in its plan to establish a fully-owned securities business in China as the bank needs additional time to comply with the country's stringent data laws.

The New York-based banking giant had initially estimated its China securities business license to be in place by mid-2023. However, the current scenario suggests that the commencement may be deferred around the end of 2024. 

The delay is linked to the complexities of ensuring compliance with China's data regulations, a crucial aspect of the licensing process.

The postponement in Citigroup's securities business plan follows the recent announcement of its decision to sell its onshore consumer wealth portfolio in China, including clients, assets under management (AUM), and deposits, to HSBC Bank China.

READ MORE: JPMorgan Chase Is Ready to Leave China if Ordered by US Government, Bank CEO Jamie Dimon Says

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