Banking giant Citigroup announces major layoffs
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Citigroup has recently disclosed its most challenging financial quarter in 15 years, facing setbacks.
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A woman walks out of the Citigroup center on Lexington Ave. on Friday, November 14, 2008, in New York. (AP)
US banking giant Citigroup has revealed intentions to lay off as many as 20,000 positions following the disclosure of a significant quarterly loss of $1.8 billion in the final three months of 2023, marking its most substantial loss in 15 years.
The multinational corporation stated on Friday that the disappointing financial outcome was attributed to $4 billion in charges and expenses, including $800 million associated with restructuring, the withdrawal from Russia, and the devaluation of Argentina’s peso.
Citigroup announced its decision to wind down its operations in Russia in August 2022. At that time, the assets of its Russian unit were approximately $10 billion, and the estimated cost of exiting Russia was $170 million. In December 2022, the bank sold its portfolio of ruble-denominated consumer loans to Russia’s Uralsib bank.
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The anticipated staff reductions could result in a cost of up to $1.8 billion for the banking major but are expected to yield annual savings of $2.5 billion by 2026, the planned completion date. Citigroup envisions an overall reduction in its headcount to as low as 180,000 by 2025 or 2026, down from a peak of 240,000 at the beginning of 2023.
The $4 billion in charges and expenses incurred in the fourth quarter encompassed a payment of $1.7 billion mandated by a "special assessment" from the Federal Deposit Insurance Corporation, aimed at recovering losses linked to regional bank failures in the previous year.
Furthermore, its quarterly earnings experienced a year-on-year decline of over 20%, with quarterly revenue also decreasing by 3% to $17.4 billion. The group's full-year earnings witnessed a 38% decrease from the previous year, totaling $9.2 billion.
A focus on – trading, banking, services, wealth management, and US consumer offerings
In the third quarter, Citigroup reported results that surpassed expectations, with a 9% increase in revenue to $20.14 billion, and a 2% growth in earnings per share to $1.63. Analysts had predicted figures of $19.27 billion and $1.22 per share, respectively. Jane Fraser, the head of Citigroup, highlighted that despite challenges, all five divisions of the bank had achieved income growth.
In November, the Wall Street giant unveiled plans for its most significant cuts in two decades, announcing the elimination of over 300 senior manager roles. The restructuring involves moving away from the firm's two core operating units and instead concentrating on five key businesses – trading, banking, services, wealth management, and US consumer offerings.
