Citigroup on Jan. 12 said it would slash 20,000 jobs, or 10 percent of its workforce, by the end of 2026 following its worst quarterly financial results in more than a decade.
Citi reported $1.8 billion net loss in the fourth quarter of 2023, according to its latest financial filings. The bank expects the layoff to save as much as $2.5 billion over the long term.
The reductions are part of a reorganization effort announced last year to cut bureaucracy, increase profits, and improve the company’s stock price.
“While the fourth quarter was very disappointing due to the impact of notable items, we made substantial progress simplifying Citi and executing our strategy in 2023,” Citigroup CEO Jane Fraser said on Jan. 12 in a statement.
Ms. Fraser said that despite a $1.8 billion loss in the recent quarterly financial results, 2024 “will be a turning point.”
“We remain confident in our ability to adapt to evolving capital and macro environments to reach our medium-term targets and return capital to our shareholders, while continuing the investments needed for our transformation,” Ms. Fraser said.
Chief Financial Officer Mark Mason said that the bank will no longer count 40,000 jobs when it spins off and lists its Mexican consumer unit Banamex through an IPO, bringing the total headcount for the company to about 180,000 by 2025 or 2026 from 240,000 at the start of 2023.
Some analysts said results from the third largest U.S. lender by assets appear strong when the one-off charges were excluded.
“Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience,” Octavio Marenzi, CEO at management consultancy firm Opimas, said.
The loss was driven by $3.8 billion in charges disclosed in a filing on Jan. 10 that included reorganization expenses, a reserve related to currency devaluations and instability in Argentina and Russia, and a $1.7 billion payment to replenish a government deposit insurance fund.
The bank stated that it expects to report between $700 million and $1 billion in severance pay and reorganization costs this year related to its planned restructuring.
“Whenever an industry or company goes through these types of reductions, it’s tough on morale,” Mr. Mason told reporters. The staffing cuts will not affect revenue growth, he said.
Citi’s revenue fell by 3 percent, to $17.4 billion, in the quarter from a year earlier. It was the first time the bank broke out earnings for its five businesses—services, markets, banking, U.S. personal banking, and wealth—which were previously housed under broader divisions.
Revenue from markets, or the trading division, dropped by 19 percent, to $3.4 billion, from a year earlier. It was dragged lower by a 25-percent plunge in fixed-income revenue from sluggish rates and currency markets, and losses from Argentina.
In contrast, banking revenue climbed by 22 percent, to $949 million, led by higher investment banking fees for debt capital markets and advisory work that offset a slide in corporate lending.
In U.S. personal banking, revenue climbed by 12 percent, to $4.9 billion, lifted by retail banking and credit cards.
But consumers have begun to show signs of stress, prompting Citi to set aside more money to cover losses on souring loans.
“The restructuring announced two months ago was a long time coming,” Chris Marinac, director of research at Janney Montgomery Scott, said. “The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out.”
