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Citigroup said it expected to cut at least 20,000 jobs, about 10 per cent of its workforce, as the struggling US bank reported its worst quarter in 14 years.
The cuts could cost as much as $1.8bn, Citi said on Friday, but save as much as $2.5bn a year by 2026 when they are due to be completed.
The bank reported a $1.8bn loss for the last three months of 2023, dragged down by $4bn of charges and expenses, including $800mn tied to the restructuring and other big hits from its exposure to Russia and the devaluation of Argentina’s peso.
Jane Fraser, chief executive, admitted that the performance was “very disappointing” but said the bank had made “substantial progress simplifying Citi and executing our strategy” and forecast that 2024 would be “a turning point”.
Shares in Citigroup rose 1 per cent in New York.
Citi’s quarterly results were the worst since the end of 2009, when it was still emerging from the financial crisis. It had one quarter in 2017 with a larger loss of $18bn from a non-cash charge related to Donald Trump’s sweeping tax cuts that affected the value of its deferred tax assets.
Fraser’s restructuring aims to streamline operations and boost the bank’s returns, which have trailed rivals.
The guiding principle is to reorient the bank, which has long been known for its geographic reach, around its lines of business rather than where it operates. Citi says the reorganisation will wipe out five layers of management, cutting them down to eight from 13, with the heads of Citi’s five business units reporting directly to Fraser.
Although Citi has said it expects to complete its reorganisation by March, the bank said on Friday that the reductions to its workforce would follow on from that rather than being completed simultaneously. The lender had shed just 1,000 roles by the end of December.
“Our [organisational] simplification will be done by the end of the first quarter,” said chief financial officer Mark Mason. “That’s what will create the opportunity to help drive the headcount reduction.”
Citi said it expected its overall headcount could fall as low as 180,000 by 2025 or 2026, from a high of 240,000 at the start of last year. On top of the jobs cut through the restructuring process, the bank expected to shed another 40,000 workers through planned exits from its consumer banking business in Mexico and elsewhere.
Among the bank’s $4bn in fourth-quarter charges and expenses included $1.7bn it had to pay as part of a “special assessment” from the Federal Deposit Insurance Corporation to recoup losses linked to last year’s regional bank failures.
Even excluding one-off charges and expenses, quarterly earnings still fell more than 20 per cent from the fourth quarter of 2022, although that was better than analysts had expected. Quarterly revenues slipped 3 per cent to $17.4bn. Citi’s full-year earnings dropped 38 per cent from the previous year, to $9.2bn.
The bank did continue to reap some benefit from the unexpectedly resilient US economy. Spending on the bank’s credit cards helped raise revenue in its consumer banking division by 12 per cent, while corporate spending helped push up revenue in Citi’s treasury services division, which manages cash and process payments for multinational companies, by 6 per cent.
Its investment banking division also performed well, with fees up more than a fifth to almost $1bn, the business’s best result in more than two years.
Revenues from corporate lending dropped 26 per cent, however, as higher interest rates dented demand for borrowing. A drop in market volatility at the end of the year also hurt the bank’s traders. Revenue from the sales and trading of bonds, commodities and currencies plunged 25 per cent.
This article has been updated to correct the period since Citi recorded a larger loss