Citigroup to cut 20,000 employees due to lagging profits

Citigroup announced its intention to cut 20,000 employees over the next two years, following a $1.8 billion net loss reported for the fourth quarter of 2023, marking the company's worst quarter in 15 years. The bank anticipates that the reduction in headcount will result in long-term savings of $2.5 billion.

For the fourth quarter, Citigroup reported a significant earnings loss of $1.16 per share, well below the estimated loss of 11 cents per share, according to FactSet. Various one-time costs, such as a $1.7 billion charge related to the regional banking crisis, an $880 million loss in Argentina, and $800 million in restructuring costs linked to about 7,000 layoffs in 2023, impacted the results.

These layoffs are part of Citigroup CEO Jane Fraser's ongoing efforts to streamline the company, reduce bureaucracy, and improve lagging profits. Despite describing the results as "very disappointing" in a Friday morning call, Fraser expressed optimism that 2024 would be a "turning point year" for the third-largest lender in the country.

Apart from the 20,000 job cuts within the company, Citigroup revealed plans to shed 40,000 employees from its Mexican retail unit through an IPO, bringing the total headcount down to around 180,000 from 240,000. The bank estimates up to $1 billion in severance pay and reorganization costs related to its planned restructuring over the next few years. A spokesperson for the US-based lender stated that the layoffs would have a global impact and declined to provide region-specific numbers.

CEO Jane Fraser had initially announced the restructuring efforts in September, aiming to rearrange the bank's leadership, enhance accountability, and boost the share price, necessitating a leaner staff. In a statement at the time, Fraser acknowledged bidding farewell to talented and hard-working colleagues.

Citi's shares experienced a 1.2% decline in afternoon trading. A correction was issued for an earlier version of the story, clarifying that Citigroup's layoffs are worldwide.