Citigroup has reportedly announced plans to cut the number of IT contractors at the bank by 30 per cent.
The bank instead plans to hire thousands of new permenant staff, according to a report by Reuters.
The move comes as the bank continues its broader focus on streamlining its structure and addressing regulatory failings which have led to significant fines in recent years.
An internal presentation seen by Reuters reveals plans to reduce external contractors from 50 per cent of the current IT workforce to 20 per cent.
The presentation also announced plans to increase technology employees from 48,000 in 2024, to 50,000.
“Citi is growing our internal technology capabilities to support our strategy to improve safety and soundness, enable revenue growth and drive efficiencies,” said the bank in a statement to Reuters.
The plans come after US regulators slapped Citigroup with a $136 million fine last year for insufficient progress in rectifying long-standing data management problems.
The regulatory issues dealt yet another blow to chief executive Jane Fraser’s efforts to overhaul the bank.
The US Federal Reserve and the Office of the Comptroller of the Currency (OCC) jointly issued the penalty, citing Citigroup’s failure to adequately address issues identified in a 2020 enforcement action.
That earlier order had required the bank to implement a comprehensive plan to improve its risk management and internal controls.
The bank has also undergone significant layoffs in recent years, including employees working on regulatory compliance.
The OCC now requires Citigroup to implement a new quarterly process to ensure adequate resources are devoted to meeting its regulatory milestones.
At the time of the penalty, Fraser assured stakeholders that the bank would “spend what is necessary to address the regulatory issues”.
The fine followed a series of regulatory challenges for Citigroup, including a $400 million penalty in 2020 for “ongoing deficiencies” in risk management and internal controls.
US regulators have also raised concerns about the bank’s plans for a “living will” in the event of bankruptcy.
Earlier this month, Citigroup almost credited about $6 billion to a customer’s account in its wealth-management business by accident, after a staff member handling the transfer copied and pasted the account number into a field for the dollar figure.
The incident happened in the same month that another part of the bank accidentally credited $81 trillion – instead of $280 – to a different client, an error that took about 90 minutes to reverse.
The incidents highlight Citigroup’s ongoing struggle to improve risk management and controls after facing regulatory penalties for compliance issues.
In January, Fraser lowered a key profitability target, partly because the bank needed to spend more money on its “transformation” plan aimed at overhauling operations and addressing regulators’ concerns.
