By Tatiana Bautzer

NEW YORK Citigroup CEO Jane Fraser said on Friday that top employees were on board with the company's sweeping reorganization, and that there was "no room for bystanders" in the bank's biggest overhaul in almost two decades.

"The case for change is pretty clear - our people want to succeed and our highest performers got behind this very quickly," Fraser told CNBC.

"We don't have room for bystanders, we don't have room for people who want to stand on the sidelines."

The bank will update investors on estimated savings from the reorganization in the fourth quarter, she said.

The company began discussions about layoffs soon after announcing the reorganization, sources close to the situation told Reuters this month. Support staff in compliance and risk management were among the most likely to lose their jobs, the sources said.

On the economy, Fraser said she expected the Federal Reserve to raise interest rates in November, but hopes there is no need for another hike.

The U.S. economy appears headed for a soft landing in which it avoids a contraction in growth, she added.

"The recession, if there is one, is going to be very manageable," Fraser said. While consumer spending remains resilient, its pace is slowing among lower-income individuals, she said.

Bank of America CEO Brian Moynihan also predicted the economy would achieve a soft landing in comments earlier this week. He cited similar patterns in consumer spending.

(Reporting by Tatiana Bautzer; editing by Christina Fincher and Rami Ayyub)