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Citigroup (C.N) revealed plans to cut 20,000 jobs over the next two years in response to a “clearly disappointing” quarter marked by one-off charges that resulted in a $1.8 billion loss. Despite the setback, bank shares rose over 1%.
CEO’s Assessment and Strategic Focus:
CEO Jane Fraser acknowledged the disappointment, stating, “The fourth quarter was very clearly disappointing. We know that 2024 is critical.” The bank, amid a multi-year effort to streamline operations, increase profitability, and elevate its stock performance, focuses on a strategic realignment.
Citigroup plans to reduce its global workforce of 239,000 by 20,000, approximately 8% of staff, through 2026. This initiative is part of a broader global restructuring effort to enhance efficiency and responsiveness.
CFO Mark Mason emphasized that the bank is committed to reaching a staffing level of 180,000 employees.
Exclusion of Jobs from Mexican Consumer Unit IPO:
As part of the restructuring, Citigroup will not include 40,000 jobs when it spins off its Mexican consumer unit Banamex in an eventual IPO.
The ultimate plan is to streamline operations and achieve greater operational efficiency.
Analysts Perspectives on Earnings:
Despite the reported $1.8 billion loss driven by one-off charges, some analysts highlighted the underlying business resilience when excluding these charges.
Octavio Marenzi, CEO at Opimas, commented, “Citigroup’s earnings looked awful with a big loss of $1.8 billion, but the bank’s underlying business showed resilience.”
The $1.8 billion loss was influenced by $3.8 billion in charges, including reorganization expenses, a reserve related to currency devaluations and instability in Argentina and Russia, and a $1.7 billion payment to replenish a government deposit insurance fund.
Future Charges and Organizational Changes:
Citigroup anticipates reporting $700 million and $1 billion in charges this year related to severance costs and the ongoing reorganization.
According to CEO Jane Fraser, the bank plans to announce additional organizational changes during the week of Jan. 22, with efforts to simplify its structure largely completed in the current quarter, saving $1 billion and eliminating around 5,000 mainly managerial roles.
