Citigroup plans to cut 20,000 jobs as it reports its worst quarter in 15 years

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Citigroup said it expects 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 that amounts to about 10 percent of its workforce, could cost up to $1.8 billion, Citi said on Friday. It is expected to save the lender up to $2.5 billion annually when completed.

Restructuring costs helped drag Citi to a loss of $1.8 billion in the fourth quarter. The bank incurred more than $4 billion in fees and expenses in the last three months of 2023, including $800 million related to the reorganization, as well as charges related to its continued exposure to Russia and the decline in the value of the Argentine peso.

Most of the job cuts have not yet occurred. 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 take place 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.

“While the fourth quarter was very disappointing due to the impact of high-profile items, we have made significant progress in streamlining Citi and executing our strategy in 2023,” Citi CEO Jane Fraser said in a statement, forecasting 2024. A turning point for the bank.

Citigroup shares were trading 1.5 percent lower by late morning in New York.

In addition to the $800 million in charges associated with the reorganization, the bank's $4 billion in fourth-quarter fees and expenses included $1.7 billion it had to pay as part of a “special assessment” from the Federal Deposit Insurance Corporation to offset losses associated with the reorganization. Regional banks failed last year

The figure also includes hundreds of millions of dollars in losses linked to the devaluation of the Argentine currency and more than $500 million in expenses related to the bank's operations in Russia, which it previously said was in the process of being liquidated.

Even excluding one-time fees and expenses, quarterly profits still fell more than 20 percent from the fourth quarter of 2022, to more than $1.5 billion, although that was better than analysts had expected. Quarterly revenue fell 3 percent to $17.4 billion. Citi'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, although less than in previous quarters. 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.