Citi to cut 20,000 jobs, posts $1.8bn loss in Disappointing Quarter

Citigroup ( C.N ) recently said in a statement that it would cut 20,000 jobs over the next two years, acknowledging a "clearly disappointing" quarter due to one-off allegations that resulted in a loss of $1.8 billion.

 

Citi to cut 20,000 jobs, posts $1.8bn loss in Disappointing Quarter

Shares of the bank — which is amid a multiyear effort to cut bureaucracy, boost profits, and boost a stock that has lagged peers — are up more than 1%.

 

The fourth quarter was very clearly disappointing for them, the CEO Jane Fraser told analysts. "We know 2024 is critical."

 

Chief Financial Officer Mark Mason told reporters that the lender will reduce its global workforce of 239,000 by 20,000 – or about 8% of staff – by 2026, including layoffs from a clean restructuring.

Mason said Citi will no longer count 40,000 jobs when it exits and lists its Mexican consumer unit Banamex in an eventual initial public offering, aiming to eventually reach a staff level of 180,000 employees.

 

Still, some analysts said results for the third-largest U.S. lender by assets looked stronger when one-off charges were excluded.

Octavio Marenzi, CEO of a management consultancy firm, has said that "Citigroup's current earnings looked dire with a big loss of $1.8 billion, but the bank's core business showed resilience."

 

The loss was driven by $3.8 billion in charges disclosed in Wednesday's filing, including $1.7 billion to replenish reserves and government deposit insurance funds related to restructuring costs, currency devaluation, and instability in Argentina and Russia. The payment was included.

 

The bank expects to report between $700 million and $1 billion in severance costs and restructuring charges this year.

"Whenever an industry or a company goes through a downturn like this, morale is high," Mason told reporters. He said that the reduction in staff will not affect the increase in income.

 

During the week of January 22, the bank will announce more organizational changes, according to a memo to staff seen by Reuters. Fraser said efforts to simplify its structure will be largely completed this quarter, saving $1 billion and eliminating about 5,000 mostly management roles.

 

'Can they hang?'

Rivals JPMorgan Chase ( JPM.N ) and Bank of America ( BAC.N ) reported lower quarterly profits on Friday, while Wells Fargo outperformed on cost-cutting.

 

Citi's revenue fell 3% to $17.4 billion in the year-ago quarter. It was the first time the bank broke down earnings for its five businesses -- services, markets, banking, US personal banking and wealth -- which were previously classified under broader divisions.

 

Revenue from the markets, or trading division, fell 19 percent from a year earlier to $3.4 billion. It was dragged down by a 25 percent drop in fixed income from slower rates and currency markets, as well as losses from Argentina.

 

In contrast, banking revenue rose 22% to $949 million, led by higher investment banking fees for debt capital markets and advisory work that offset a decline in corporate lending.

 

In U.S. personal banking, revenue rose 12% to $4.9 billion, lifted by retail banking and credit cards.

 

But our customers are starting to show signs of stress, prompting Citi to set aside more money to cover loan losses.

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