Citi will cut 20,000 jobs over the next two years, the bank said on Friday after reporting a $1.8 billion loss for the fourth quarter.
The bank, with a current global workforce of 239,000 employees, plans to cut 20,000 jobs through a significant reorganization, as shared by Chief Financial Officer Mark Mason.
Additionally, Citi anticipates that 40,000 jobs will be excluded when its Mexican consumer unit Banamex is spun off and listed in an initial public offering. With these changes, the bank aims to bring its staff count down to 180,000 employees, considering both the layoffs and the separation of Banamex.
The bank’s shares rose as much as 3.3% in morning trading before paring back gains. They were up 0.3% in mid-morning trading, after CEO Jane Fraser described 2024 as a “turning point year” for the lender. Analysts said excluding the one-off charges, Citi’s results showed strength.
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CEO at management consultancy firm, Opimas Octavio Marenzi said that “Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience.”
The reported loss is a result of several factors amounting to $3.8 billion, as outlined in a recent filing. These factors include expenses related to reorganization, setting aside funds due to currency devaluations and issues in Argentina and Russia, and a $1.7 billion payment to the FDIC for deposit insurance.
Looking ahead, the bank anticipates additional charges of $700 million to $1 billion this year, mainly attributed to severance costs and ongoing reorganization efforts.
“Whenever an industry or company goes through these types of reductions, it’s tough on morale,” Mason told reporters. The staffing cuts will not impede revenue growth, he said.
Fraser has rolled out a multi-year effort at the third-largest U.S. lender by assets to cut bureaucracy, increase profits and boost a stock that has lagged peers.
Rivals JPMorgan Chase (JPM.N) and Bank of America (BAC.N) on Friday reported lower quarterly profits, while Wells Fargo outperformed on cost cuts.
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Citi experienced a 3% decline in revenue, reaching $17.4 billion in the quarter compared to the previous year.
For the first time, the bank separately disclosed earnings for its five businesses—services, markets, banking, U.S. personal banking, and wealth.
The trading division, referred to as markets, saw a significant drop in revenue by 19%, amounting to $3.4 billion, with fixed income revenue decreasing by 25%. The decline was influenced, in part, by losses associated with Argentina.
In contrast, banking revenue climbed 22% to $949 million, led by higher investment banking fees that offset a slide in corporate lending.
In U.S. personal banking, revenue climbed 12% to $4.9 billion, lifted by retail banking and credit cards.
However, consumers are starting to exhibit signs of financial strain. Citi increased the amount of money set aside as a precautionary measure to cover potential losses in case clients face difficulties repaying their credit cards, mortgages, or business loans.
