Citigroup, one of the largest banking institutions in the United States, has declared plans to implement substantial layoffs, with up to 20,000 jobs at risk, in response to its worst quarterly performance in 15 years. The multinational financial powerhouse reported a steep quarterly loss of $1.8 billion for the final quarter of 2023, attributing the disappointing results to various charges and expenses totaling $4 billion.
Key Highlights:
- Quarterly Loss Breakdown: The $1.8 billion quarterly loss is attributed to a range of charges and expenses, including $800 million related to restructuring, a strategic withdrawal from Russia, and the devaluation of Argentina’s peso.
- Strategic Withdrawal from Russia: Citigroup had announced plans to wind down its operations in Russia in August 2022, with the subsequent sale of its ruble-denominated consumer loans portfolio in December 2022.
- Cost of Staff Reductions: The anticipated staff reductions could lead to costs of up to $1.8 billion, with the expectation of generating annual savings of $2.5 billion by the completion of the restructuring in 2026.
- Overall Headcount Projection: Citigroup envisions a decline in its overall headcount to as low as 180,000 by 2025 or 2026, marking a significant reduction from the peak of 240,000 employees at the beginning of 2023.
- Special Assessment Payment: Part of the fourth-quarter charges included a $1.7 billion payment mandated by the Federal Deposit Insurance Corporation (FDIC) as a ‘special assessment’ to recover losses linked to regional bank failures.
Financial Performance Overview:
- Year-on-Year Earnings Decline: Citigroup’s quarterly earnings experienced a year-on-year decline of more than 20%, coupled with a 3% reduction in quarterly revenue to $17.4 billion.
- Full-Year Earnings: The group’s full-year earnings witnessed a 38% drop from the previous year, totaling $9.2 billion.
- Previous Quarter Performance: In the third quarter, Citigroup posted better-than-expected results, with revenue rising 9% to $20.14 billion, showcasing income growth across its five divisions despite challenges.
Strategic Restructuring Initiatives:
- Massive Job Cuts: As part of its largest restructuring in two decades, Citigroup announced plans to eliminate over 300 senior manager roles in November, signaling a shift towards a more focused business model.
- Core Operating Unit Shift: The restructuring involves abandoning the firm’s two core operating units and redirecting focus towards five key businesses – trading, banking, services, wealth management, and US consumer offerings.
