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Citigroup said it expected to cut at least 20,000 jobs over the next three years, as it reported its worst quarter in 15 years.
The cuts, which are part of a sweeping overhaul of the bank announced in September and amount to about 10 per cent of its workforce, could cost as much as $1.8bn, said Citi on Friday. They are expected to save the lender as much as $2.5bn a year when complete.
Costs from the restructuring helped drag Citi to a $1.8bn loss in the fourth quarter. The bank took more than $4bn in charges and expenses in the final three months of 2023, including $800mn tied to the reorganisation, as well as charges linked to its continued exposure to Russia and the devaluation of Argentina’s peso.
Most of the job cuts have yet to take place. Although Citi has said it expects to complete its reorganisation by March this year, 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.
“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,” said Citi chief executive Jane Fraser in a statement, in which she forecast that 2024 would be “a turning point” for the bank.
Shares in Citigroup were trading 1.5 per cent lower by late morning in New York.
As well as the $800mn in charges linked to the reorganisation, 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
The figure also included hundreds of millions of dollars of losses tied to the devaluation of the Argentine currency and more than $500mn in expenses related to the lender’s operations in Russia, which it had previously said it was in the process of winding down.
Even excluding one-off charges and expenses, quarterly earnings still fell more than 20 per cent from the fourth quarter of 2022, to more than $1.5bn, 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, although less than in previous quarters. 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 multinationals, 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.