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Citigroup Inc. said it expects to cut at least 20,000 jobs, or about 10% of its workforce, after the troubled U.S. bank suffered its worst quarter in 14 years.
Citi said Friday that the cuts could cost up to $1.8 billion but would save up to $2.5 billion a year by the time they are scheduled to be completed in 2026.
The bank reported a loss of $1.8 billion in the last three months of 2023, including $800 million from restructuring and other heavy losses from exposure to Russia and the devaluation of the Argentine peso. dragged down by dollar fees and expenses.
Chief executive Jane Fraser acknowledged that the results had been “very disappointing” but said the bank had made “significant progress in simplifying Citi and executing our strategy”, and said the bank had made “significant progress in simplifying Citi and executing our strategy” and expected 2024 results. He predicted that this would be a “turning point.”
Citigroup shares were flat in early afternoon trading in New York.
Citi's quarterly results were its worst since late 2009, when the company was emerging from the financial crisis. The 2017 quarter saw an even larger loss of $18 billion in non-cash charges related to President Donald Trump's deep tax cuts that affected the value of deferred tax assets.
Fraser's reorganization is aimed at streamlining operations and increasing profits for the bank, which has lagged behind its competitors.
The guiding principle is to reorient the bank, which has long been known for its geographical scope, to align with its lines of business rather than where it operates. Citi said the reorganization will eliminate five levels of management, reducing the number from 13 to eight, with the heads of Citi's five business units reporting directly to Fraser.
Citi says it expects to complete the reorganization by March, but the bank said on Friday that the job cuts would follow rather than be completed at the same time. By the end of December, the lender had cut just 1,000 roles.
“our [organisational] The simplification is expected to be completed by the end of the first quarter,” said Mark Mason, Chief Financial Officer. “That creates an opportunity to drive downsizing.”
Citi said it expects its overall workforce could fall to 180,000 by 2025 or 2026, from a high of 240,000 early last year. In addition to the job cuts during the restructuring process, the bank expected to cut an additional 40,000 employees due to its planned exit from consumer banking operations in Mexico and other countries.
The bank's $4 billion in fourth-quarter fees and expenses included the $1.7 billion it had to pay as part of a “special assessment” from the Federal Deposit Insurance Corporation to recoup losses from last year's regional bank failure. Dollars were included.
Even excluding one-time charges and expenses, quarterly profit was still down more than 20% from the fourth quarter of 2022, but better than analysts expected. Quarterly sales fell 3% to $17.4 billion. Citi's full-year profit was $9.2 billion, down 38% from a year ago.
The bank continued to enjoy some benefits from the unexpectedly resilient US economy. Credit card usage at the bank boosted revenue at its consumer banking division by 12%, while corporate spending boosted revenue at Citi's treasury services division, which manages cash and processes payments for multinational corporations, by 6%.
Investment banking also performed well, with fees rising by more than a fifth to nearly $1 billion, the best performance in more than two years.
However, corporate loan income fell by 26% as borrowing demand declined due to rising interest rates. Lower market volatility at the end of the year also hurt the bank's traders. Revenues from sales and trading of bonds, commodities and currencies fell by 25%.
This article has been updated to correct the period as Citi recorded a larger loss.
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