May 19, 2024

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Citigroup (C) to Cut 430 Jobs in U.S. Investment Bank Unit

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Citigroup (C) to Cut 430 Jobs in U.S. Investment Bank Unit

Citigroup Inc. C has reportedly implemented a new round of job cuts in its U.S. investment bank business as part of its planned restructuring efforts. Particularly, per filings with the New York State Department of Labor dated Apr 1, the company will lay off 430 people.

Bankers in the technology, media and telecom space are likely to be affected.

Last week, the bank announced the completion of major actions to simplify its operating structure and improve performance, which were initially announced in September 2023.The reorganization trims management layers to eight from 13 and its global workforce by 20,000 over the next two years. Since September, the company has eliminated 5,000 jobs.

Along with its fourth-quarter 2023 results released in January, the company remarked on reducing 1,500 managerial roles, comprising 13% of its worldwide leaders. It was then projected to create annual savings of $1 billion. Such efforts will make the decision-making process swifter, drive increased accountability and enhance the focus on clients.

The latest layoffs are expected to take place in June, according to the filings.

The company is also progressing on its major strategic action to exit the consumer banking business in 14 markets across Asia and the EMEA. The bank has closed sales in nine markets, including Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, Vietnam and Indonesia. It has substantially wound down the consumer banking business in South Korea, Russia and China. The company has restarted its sale procedure in Poland. It remains on track to separate its Mexico business through an IPO in 2025.

Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke fee income growth.

Notably, earlier this month, Citigroup’s head of global wealth, Andy Sieg, announced that the company plans to expand its wealth management business in the Greater Bay Area and the rest of Asia from its base in Hong Kong. The move is part of the bank’s plan to tap into the growing wealth in Asia, particularly leveraging Hong Kong’s financial hub status.

Over the past six months, shares of Citigroup have gained 56.7% compared with the industry’s 39.7% growth.

 

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Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Job Cuts by Other Companies

Barclays PLC BCS plans to cut several hundred jobs across its investment bank division. The cuts, expected to take place in the coming months, resulted from the bank’s annual review process. The news was first reported by Bloomberg, citing people familiar with the matter.

The slashes are expected to affect the workforce in global markets, research and BCS’s investment banking arm.

In February, the Wall Street Journal reported that Morgan Stanley MS plans to lay off hundreds of workers from its wealth management (“WM”) division, a move that is expected to impact less than 1% of the unit’s employees.

The move came as the investment banking giant seeks to reduce costs amid economic uncertainty and concerns regarding the trajectory of interest rate cuts by the Federal Reserve.

Morgan Stanley has been focusing more on its WM segment and less on the institutional securities segment (constituting trading and investment banking) over the past few years. This is because the WM segment is less dependent on the capital markets and is a less volatile revenue source.

The WM segment became an important profit-making unit for MS post the acquisitions of Eaton Vance and E*Trade Financial under former CEO James Gorman.

However, last year, the segment’s revenues were flat year over year.

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