City Group To Cut 20,000 Jobs After Revenue Loss
City Group is set to furlough 20,000 employees over the next two years, which is expected to save the company $2.5 billion, according to CFO Mark Mason. The move has come after the company reported a $1.8 billion net loss for the fourth quarter of 2023, its worst quarter in 15 years, with an earning loss of 1.16 per share for the fourth quarter, far below estimates of a loss of 11 cents per share, according to FactSet.
Citi attributed the loss to several one-time costs, including a $1.7 billion charge the bank had to pay to the regional banking crisis last spring, an $880 million loss in Argentina, and $800 million in restructuring costs associated with about 7,000 layoffs in 2023.
These layoffs have come as part of Citi CEO Jane Fraser”s effort to avoid red tape at the company for boosting lagging profits after the disappointing results, as Fraser expressed optimism that 2024 would be a “turning point year” for the US’s third largest lender.
“Whenever an industry or company goes through these types of reductions, it’s tough on morale,” said Manson on a Friday morning call with reporters. “With that said, I would point to the fact that we’ve been very clear about the strategy of the firm and very clear about the momentum that we expect.”
In addition to the 20,000 job cuts at the company’s operations, the bank will shed 40,000 employees from its Mexican retail unit through an IPO, bringing the total headcount for the company to around 180,000 from 240,000, with the expectation of paying up to $1 billion in severance pay and reorganization costs to its planned restructuring. The bank hopes the layoffs will be global in scope and declined to break out numbers by region.
Citigroup CEO Jane Fraser first announced her sweeping restructuring efforts last September as part of her plans to rearrange the bank’s leadership, increase accountability, and boost the share price. “We’ll be saying goodbye to some very talented and hard-working colleagues,” Fraser wrote at the time. Shares of Citi were down 1.2% in afternoon trading.
