NEW YORK: Citigroup will cut 20,000 jobs over the next two years, its Chief Financial Officer Mark Mason said on Friday, after the bank reported a $1.8 billion loss for the fourth quarter.
The lender, which currently has 239,000 employees worldwide, will reduce that headcount by 20,000 as part of a sweeping reorganization, Mason told reporters. Citi also expects to shed a further 40,000 jobs when it lists its Mexican consumer unit Banamex in an initial public offering. It ultimately aims to reach a staffing level of 180,000 employees, Mason said.
Shares in the bank were last up 3.3 percent in morning trading on Friday after CEO Jane Fraser described 2024 as a "turning point year" for the lender. Job cuts are "tough on morale," Mason said. But he added that the reduction will not prevent revenue growth and said reorganization efforts will be done by the end of the first quarter.
Citi reported the loss due to $3.8 billion in charges disclosed in a filing on Wednesday that included reorganization expenses, a reserve build related to currency devaluations and instability in Argentina and Russia and a $1.7 billion payment to replenish deposit insurance fund FDIC.
The bank expects to report between $700 million and $1 billion in charges this year related to severance costs and the reorganization. Fraser has rolled out a multi-year effort at the third-largest U.S. lender by assets to cut bureaucracy, increase profits and boost a stock that has lagged peers.
"Citigroup's earnings looked awful with a big loss of $1.8 billion, but the bank's underlying business showed resilience. The loss was largely due to exceptional items, as well as a big increase in reserves for credit losses," said Octavio Marenzi, CEO, management consultancy firm Opimas LLC.
Rivals JPMorgan Chase and Bank of America (BAC.N) on Friday reported lower quarterly profits, while Wells Fargo outperformed on cost cuts. Citi's revenue fell 3 percent to $17.4 billion in the quarter from a year earlier.
It was the first time the bank broke out earnings for its five businesses -- services, markets, banking, U.S. personal banking and wealth, which were previously housed under broader divisions.
Revenue from markets, or the trading division, dropped 19% to $3.4 billion from a year earlier. It was dragged lower by a 25 percent plunge in fixed income revenue, which included some losses from Argentina.
In contrast, banking revenue climbed 22 percent to $949 million, led by higher investment banking fees that offset a slide in corporate lending. In U.S. personal banking, revenue climbed 12 percent to $4.9 billion, lifted by retail banking and credit cards.
Services revenue grew 6 percent to $4.5 billion and wealth management revenues fell 3 percent to $1.7 billion. The bank also set aside a bigger reserve to cover losses if its clients are unable to pay off their credit cards or mortgages or business loans.
Citigroup previously said it would exit municipal bond and distressed debt trading operations as part of the streamlining exercise. Earlier this week, the company said it booked bigger charges in the quarter than previously disclosed by Mason.
“Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience,” Octavio Marenzi, CEO of consulting firm Opimas LLC, said in an email. (CEO Jane) Fraser will be under mounting pressure to deliver results this year, he added.
Citigroup has been struggling with growing expenses, and that prompted Fraser to launch a massive restructuring effort in September. But ahead of its earnings report, the company warned that additional expenses, including those on account of its exposure to Russia and Argentina, as well as commitments to the Federal Deposit Insurance Corporation (FDIC), could hurt the numbers.
