Citigroup Plans Massive Global Workforce Reduction Amid Restructuring Effort

Citigroup, one of the leading global financial institutions, is initiating a sweeping reorganization that will see a reduction of its workforce by approximately 20,000 jobs over the next four years. This news comes in the wake of Citigroup reporting a substantial loss of $1.8 billion for the fourth quarter.

The bank's Chief Financial Officer, Mark Mason, detailed to reporters that Citigroup, currently employing 239,000 individuals globally, is streamlining its operations with a target headcount of approximately 180,000 employees. The aggressive downsizing is slated to be implemented progressively through 2026.

Moreover, the organization is preparing to detach itself from its Mexican consumer unit, Banamex, via an initial public offering which is forecasted to further reduce the workforce by 40,000 jobs.

The restructuring announcement coincided with a notable increase in Citigroup's share prices, which saw an uplift of 3.3% in morning trading. CEO Jane Fraser signified the year 2024 as a "turning point year" for Citigroup, spurring optimism among investors notwithstanding the job reduction news. Mason acknowledged the impact on morale due to job cuts but remained firm on the stance that these changes would not hinder revenue growth.

Citigroup's fourth-quarter loss has been attributed to an amalgamation of factors; $3.8 billion in charges as detailed in a recent filing, which encompassed costs related to the ongoing reorganization, reserve builds for potential currency devaluations, particularly in Argentina and Russia, as well as a $1.7 billion replenishment to the Federal Deposit Insurance Corporation (FDIC).

The bank estimates additional charges in the range of $700 million to $1 billion this year, which will primarily go towards severance and reorganization expenses.

The third-largest US lender by assets is undergoing a transformative era under Fraser's leadership, who is keen on diminishing bureaucracy, amplifying profits, and elevating stock performance which has historically fallen behind its competitors.

Despite the significant loss, analysts like Octavio Marenzi, CEO of Opimas LLC, a management consultancy firm, emphasize the underlying resilience in Citigroup's business. Marenzi points out that the loss was substantially influenced by exceptional items and increased reserves for credit losses.

Citigroup's peers also disclosed their quarterly earnings; JPMorgan Chase and Bank of America reported reduced profits, whereas Wells Fargo exceeded expectations through effective cost reductions.

A breakdown of Citigroup's earnings, which provides insights into performance across its five business segments, showed mixed results. Markets revenue saw a 19% decrease, heavily impacted by a 25% drop in fixed-income revenue. On a positive note, banking revenue increased by 22%, with investment banking fees compensating for a decline in corporate lending. The US personal banking segment witnessed a 12% revenue increase, bolstered by retail banking and credit cards. Services revenue experienced a 6% growth, whereas wealth management revenues faced a slight downturn.

Looking ahead, Citigroup has also prepared for the possibility of credit defaults by setting aside an enlarged reserve to cover potential losses from client credit cards, mortgages, or business loans.