Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.
Citigroup said it expects to cut at least 20,000 jobs, about 10 percent of its workforce, as the struggling US bank reported its worst quarter in 14 years.
Citibank said on Friday that the cuts could cost up to $1.8 billion, but would save up to $2.5 billion annually by 2026 when they are scheduled to be completed.
The bank reported a loss of $1.8 billion for the final three months of 2023, hurt by $4 billion in charges and expenses, including $800 million related to restructuring and other significant hits stemming from its exposure to Russia and the depreciation of the Argentine peso.
Jane Fraser, chief executive, admitted the performance was “very disappointing” but said the bank had made “significant progress in simplifying Citi and executing our strategy” and she expected 2024 to be a “turning point”.
Citigroup shares rose 1.7 percent in afternoon trading 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 $18 billion from non-cash charges related to Donald Trump's sweeping tax cuts that impacted the value of its deferred tax assets.
Fraser's restructuring aims to streamline operations and boost the bank's returns, which has lagged behind its competitors.
The guiding principle is to reorient the bank, long known for its geographic reach, around its business lines rather than where it operates. Citi says the reorganization will eliminate five layers of management, reducing it to 8 from 13, with the heads of Citi's five business units reporting directly to Fraser.
Although Citi said it expects to complete the reorganization by March this year, the bank said on Friday that reductions in its workforce would follow rather than being completed all at once. The lender had cut just 1,000 jobs by the end of December.
“our [organisational] “The simplification will occur by the end of the first quarter,” CFO Mark Mason said. “This will create the opportunity to help reduce headcount.”
Citi said it expects its total headcount to fall to 180,000 by 2025 or 2026, from 240,000 at the beginning of last year. On top of the jobs cut through the restructuring, the bank expects to lay off another 40,000 workers through planned exits from its consumer banking business in Mexico and elsewhere.
Among the bank's $4 billion in fees and expenses in the fourth quarter was $1.7 billion it had to pay as part of a “special assessment” from the Federal Deposit Insurance Corporation to offset losses linked to the failure of regional banks last year.
Even excluding one-time fees and expenses, quarterly profits were still down more than 20 percent from the fourth quarter of 2022, although that was better than analysts had expected. Quarterly revenue fell 3 percent to $17.4 billion. Citibank's full-year profits fell 38 percent from the previous year, to $9.2 billion.
The bank continued to reap some benefits from the unexpectedly resilient US economy. Spending on the bank's credit cards helped boost revenue in its consumer banking division by 12 percent, while corporate spending helped boost revenue in Citi's treasury services division, which manages cash and payment processing for multinational companies, by 6 percent.
The investment banking division also performed well, with fees rising by more than a fifth to nearly $1 billion, the company's best result in more than two years.
However, corporate lending revenues fell by 26 percent, as higher interest rates reduced demand for borrowing. The decline in 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 percent.
This article has been updated to correct the period since Citi posted the larger loss
“Web maven. Infuriatingly humble beer geek. Bacon fanatic. Typical creator. Music expert.”