Citigroup announces plans to cut 20,000 jobs as part of a strategic overhaul. CEO Jane Fraser emphasizes, ‘While the fourth quarter was very disappointing due to the impact of notable items, we made substantial progress simplifying Citi and executing our strategy in 2023.’ The move follows the bank’s worst quarterly financial results in over a decade, with a reported $1.8 billion loss. The restructuring aims to save $2.5 billion, positioning Citigroup for a pivotal 2024.
This decision follows Citigroup’s recent struggles. They reported a massive loss of $1.8 billion in the last quarter of 2023, marking their worst financial performance in over a decade. To turn things around, the bank is embarking on a significant restructuring effort, aiming to save a substantial $2.5 billion in the long run.
Jane Fraser openly acknowledges the disappointment in the recent financial results, saying, “While the fourth quarter was very disappointing due to the impact of notable items, we made substantial progress simplifying Citi and executing our strategy in 2023.” Her straightforward acknowledgment shows that the company is facing challenges head-on.
The details behind the financial setbacks reveal several one-time costs. These include a $1.7 billion charge related to a regional banking crisis, an $880 million loss in Argentina, and $800 million in restructuring costs linked to about 7,000 layoffs in 2023. These layoffs are part of Jane Fraser’s ongoing efforts to cut unnecessary processes at the company and boost profits.
But Citigroup’s changes aren’t just within its main operations. They’re also planning to get rid of 40,000 employees from their Mexican retail unit through an IPO. This, combined with the announced job cuts, will bring the total number of employees down to around 180,000 from the current 240,000.
The impact of these layoffs is felt globally, with a spokesperson for the U.S.-based lender confirming that these job cuts will be spread worldwide, although they won’t provide specific numbers for each region.
Experts weigh in on Citigroup’s bold moves, with Octavio Marenzi, CEO at management consultancy firm Opimas, saying, “Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience.” Analysts believe that if you remove the one-time charges, Citigroup’s core business is still strong.
Read Also: Discord reveals major layoff, cutting 17% workforce!
The entire financial sector is going through a tough time, as major banks like JPMorgan Chase and Bank of America also reported lower profits in the last quarter. Citigroup’s revenue for the quarter dropped by 3% to $17.4 billion from the previous year. The bank now breaks out earnings for its five businesses, providing a closer look at its financial performance.
The markets division faced a 19% decline in revenue to $3.4 billion, mainly due to a 25% drop in fixed income revenue because of slow rates and currency markets, along with losses from Argentina. On the flip side, banking revenue saw a significant 22% increase to $949 million, led by higher investment banking fees for debt capital markets and advisory work.
U.S. personal banking, a crucial part of Citigroup’s operations, saw a 12% revenue climb to $4.9 billion, driven by retail banking and credit cards. However, due to signs of consumer stress, Citigroup set aside extra funds to cover potential losses on risky loans.
Citigroup’s restructuring efforts, first announced by CEO Jane Fraser in September, indicate a big step toward making the company more streamlined. The ultimate goal is to be more accountable, increase profits, and, ultimately, boost the bank’s share price. While the path ahead is tough, Fraser sees 2024 as a “turning point year” for the third-largest U.S. lender.
Chris Marinac, director of research at Janney Montgomery Scott, sums up the restructuring, saying, “The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out.“
As Citigroup navigates these challenging times, the announced job cuts and organizational restructuring underscore a commitment to weathering the storm and emerging as a stronger, more agile financial institution. With the groundwork laid for a transformative 2024, Citigroup faces both challenges and opportunities on its path to financial revitalization.
Read More: Apple’s CEO Tim Cook Takes a $36M Hit: The Inside Scoop
