Published by Global Banking and Finance Review
Posted on March 13, 2025
By Elisa Martinuzzi and Tatiana Bautzer
LONDON/NEW YORK (Reuters) - Citigroup plans to dramatically reduce its reliance on information technology contractors and hire thousands of employees for IT as the lender grapples with regulatory punishments over data governance and deficient controls.
Citigroup's head of technology Tim Ryan told staff in recent weeks that the bank aims to cut back external contractors to 20% of those working in IT from the current 50%, according to an internal presentation to employees seen by Reuters. The briefing did not give a precise time horizon for the changes.
As part of the overhaul, Citi will replenish the ranks by hiring more staff, and aims to have 50,000 employees in technology, up from 48,000 in 2024, the presentation showed.
"Citi is growing our internal technology capabilities to support our strategy to improve safety and soundness, enable revenue growth and drive efficiencies," Citi said in a statement to Reuters.
The latest details of the IT revamp, reported here for the first time, show how Citi is attempting to meet regulatory demands that the bank improve risk management and data governance.
Ryan joined Citi from PwC in June last year, just weeks before the bank was fined $136 million by regulators for making insufficient progress on longstanding data management problems.
Finance chief Mark Mason in January said Citi is investing more to address its data issues. The lender cut its closely-watched profitability target for 2026 as it tackles rising regulatory expenses.
In one example of its IT challenges, the lender referenced a $22.9 million "recent fraud event" related to the work of external contractors, the presentation showed.
The $22.9 million also included legitimate work, according to a person with knowledge of the matter who declined to specify the amount. The person asked for anonymity to discuss the issue publicly.
While small for a bank that earned $12.7 billion in 2024, the fraud is another indication of the scale of Citi's hurdles as it aims to reduce its reliance on external workers.
"In the rare instances that we detect any fraudulent activity, whether internally or by a vendor, we take immediate action to hold those responsible accountable for their actions," Citi said.
Citi had warned some employees in September about fraud and unethical behavior and said it was considering tighter scrutiny of contractors.
The lender could cut the current number of external suppliers to 50 from 144, the briefing shows, and the bank over time plans to increase the percentage of workers in higher cost locations. Places it considers high cost include New Jersey, New York and Irving, U.S., while it identifies as low-cost locations such as Chennai, India, Belfast, UK, and Warsaw, Poland.
"It seems to be one more step on the reconfiguration of their systems to fix long-standing problems. They are better than they were a decade ago, but still need to improve", said Mike Mayo, bank analyst at Wells Fargo.
Citigroup shares were down 0.7% on Thursday early afternoon trading, as the S&P500 was down 1.1%. The bank shares accumulate a 4.4% loss this year.
The bank also plans to move the IT team that currently works at Rutherford, New Jersey, to a consolidated site in Jersey City next year. There will be no technology operations in Rutherford, although the bank will keep other teams there.
(Reporting by Elisa Martinuzzi in London and Tatiana Bautzer in New York. Editing by Lananh Nguyen, Megan Davies, Mark Potter, Alexandra Hudson)
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