Happy New Year Citi Employees. CEO Jane Fraser wants to boost profits. 
Citigroup to Cut 20,000 Jobs Following Disappointing Quarter
Bloomberg reports Citi to Cut 20,000 Roles in Fraser’s Bid to Boost Returns
Citigroup Inc. said it will eliminate 20,000 roles in a move that will save it as much as $2.5 billion as part of Chief Executive Officer Jane Fraser’s quest to boost the Wall Street giant’s lagging returns.
Firmwide expenses are expected to drop to a range of $51 billion to $53 billion over the medium-term, Citigroup said. In the meantime, though, the firm expects to incur as much as $1 billion in expenses tied to severance payments and Fraser’s broader overhaul of the bank.
“The fourth quarter was very disappointing,” Fraser said in the statement. “Given how far we are down the path of our simplification and divestitures, 2024 will be a turning point.”
The outlook for cost savings helped mask a disappointing fourth quarter, when Citigroup’s fixed-income traders turned in their worst performance in five years as the rates and currencies business was stung by a slump in client activity in the final weeks of the year. Revenue from the business slumped 25% to $2.6 billion.
As it has sought to increase those returns, Citigroup decided to shutter its municipal business and distressed-debt trading unit, just as rival JPMorgan Chase & Co. invests further in the latter area. The bank is prepared to exit additional businesses within its markets division if they “don’t make sense for the go-forward strategy,” Chief Financial Officer Mark Mason said on a call with reporters.
Ultimately, firmwide headcount will decline by 60,000 jobs to 180,000 by the end of 2026, Mason said. That includes the 20,000 roles that will be eliminated as part of Fraser’s broader overhaul as well as 40,000 staffers that will depart when Citigroup lists its consumer, small business and middle-market banking businesses in Mexico in an initial public offering.
Ten Percent of Workforce
The Wall Street Journal notes the 20,000 layoffs are about ten percent of the workforce.
The cuts will trim about 10% of Citi’s head count, which totaled 200,000 in December excluding the staff employed by a Mexico business that is being spun off. Citi detailed its cost-cutting plans on Friday, when it also announced a fourth-quarter loss.
The third-biggest U.S. bank threw a kitchen sink of charges and expenses into its final 2023 earnings report, previewing them in a late Wednesday regulatory filing. The items, including some that exceeded what Citi had forecast as recently as last month, clouded underlying results that showed improvements in several key businesses.
Overall, Citi reported a net loss of $1.8 billion, or $1.16 a share, compared with net income of $2.51 billion, or $1.16 a share, in the same period a year earlier.
Revenue fell 3% to $17.4 billion from $18 billion. Citi said the recent devaluation of the Argentine peso had wiped out $880 million of the most-recent quarter’s revenue.
“Citigroup decided to shutter its municipal business and distressed-debt trading unit”
This means liquidity is drying up in those areas, or risks are not worth the reward. Social programs/social agendas are now on the chopping block. Poorly run companies will finally have to shutter.
That reduction is through 2026 which would make it lower than the rate of attrition so possibly no layoffs – just reduced hiring.
Bad news for NYC RE.
devaluation of the Argentine peso had wiped out $880 million of the most-recent quarter’s revenue.
Way to go Milei! And, I’m being serious! Woohoo!!!
I smell recession!
No timeframe or US headcount given, but I would agree that if we get 8-10 more big layoff announcements, then a recession in the later half of ’24 seems very possible.
FT jobs are down… that will gradually propagate through the system… you can’t sell shakes and vacay to people with diminished and diminishing disposible income, and you can’t tax what isn’t there. So we go from high rates eating wages, to low rates and low wages, and the net difference is probably mostly the same for most people.
AI is gonna reduce a lot of jobs that are repetitive and non-creative. The learning component of AI is going to affect a lot people who don’t actually create anything unique or innovative.
I completely agree. I’m glad I’ve only got 6 more years of teaching.
AI can’t teach everything, at best it is an assistive technology only.
We use it in an assistive capacity at my job. It basically flags certain transactions for review by a human. It elimated the tedious sorting and flagging work that everyone hated doing in the 1st place.
I doubt it. Most AI doesn’t do anything that creates any extra value, nor does it create anything that saves any costs, or that supplants anything else… it’s nowhere near mature enough to deliver much. It’s great for raising cash from from investors though.
Hmmm, whodathunk that the jobs of people doing repetitive computer/paper-things every day were not forever jobs
What like programmers and engineers who make AI? Hmm… oh wait!
50% Monetary Gifting at retail sale, a paradigm change in a single policy.
…the firm expects to incur as much as $1 billion in expenses tied to severance payments.
That’s 50,000 per employee. If severance is for 2 months, that amounts to an average salary of 25,000.
Just saying.
That used to be a solid wage…
It isn’t annualized. Each fired employee gets an average of $50k to go away. No doubt some get a lot more.
Payback of that $1B in two months. What a deal. Why stop at 10%?
Shareholders at other banks will say “look at Citi!–we can do the same thing here.” Then Citi shareholders will say “we can do better than 10%! We can replace half of our bean counters with AI!”
Race to the bottom!
Not everywhere, and banking jobs can be transnationally mobile.
Pesos or dollars?
“Boosting profits” is what a CEO is supposed to do.
While I agree with your statement, I think it’s the manner in which it was/is done.
Not a very good CEO, if he didn’t realize thing’s were getting so bad, and so fast, that he was forced to cut 20,000 workers. What the hell was he doing all day?
You hear and see layoffs all the time, but they are typically much, much smaller than 20,000 at a whack. It is used to trim as things slow down, or cut back a bit due to profits starting to head down. It’s not meant to just get rid of 20,000 workers on any given day. This should have been handled far more professionally and not so instant, as they were watching the numbers along the way, it could have been small chunks at a time. Maybe they would not have needed such drastic steps if they did so…
They probably overhired. In most companies you can lose 10% of the worst performers and even get a boost in productivity. The Power Distribution or Pareto rule applies again: the minority of compentent people carry the rest.
Nobody owes anyone a living. Always be prepared to be laid off and also be thinking about how you can start your own company. F working for other people.
Amen. People forget that even a “permanent contract” is temporary… even clients are your boss… all of us are contractors… but a bloated public sector tends to trick people into thinking they have a job for life and entitlements, especially in Europe.
I have a better idea … if she can run a company with no employees at all, the profits will simply skyrocket. Just offer virtual services to the clients, the banking equivalent of shrinkflation. I am waiting for the day when companies will only sell bags with the picture of chips on them.
Citi missed a perfect opportunity to blame the job cuts on AI. I expect that will be a one off, and the next quarter losses will be blamed on dumb robots.
…or dumb staff who designed, built, set up, operated, and maintained those robots.
So if 20,000 was the 10% that needed to be cut, then how many further cuts in banking will we see? Citi is not a small bank, and for conversion sake, let’s say the number is 3M total workers in the large banks across the country. 10% would be a lot of people unemployed, and that’s just banks! Whatever that number is it’s disturbing for sure.
Now let’s add in all the companies that rely of these banks to exist financially. Say they all are forced to cut as well, or close due to lack of liquidity of their money, to be able to stay open. If banks are cutting, they are only lending to pristine and proven customers I would think.
Here comes the longtime recession realtime, and it will be here to stay for a bit, by the looks of it.
God Speed
Not just banks.
What a great place to work.