Citi's restructuring will be traumatic. The American bank plans about 20,000 layoffs in the next three years, as announced this Friday after presenting results with which it has suffered quarterly losses of 1,839 million dollars and a 38% drop in annual results, to 9,228 million. The group's CEO, Jane Fraser, is immersed in a process of reorganizing the group into different business units that will mean the toughest adjustment in decades for the Wall Street giant, with a cut of nearly 10% of the workforce.
By cutting 20,000 jobs, the bank expects to save between $51 billion and $53 billion. The group has already incurred expenses for compensation and layoffs in relation to the layoff of some 6,000 people; In the fourth quarter, it has targeted some 800 million in restructuring and layoffs that affect around 7,000 more people, and it also expects to score an additional 700 to 1,000 million during 2024, mainly in compensation, according to detailed in a presentation to analysts in which it says that it expects “a net reduction in the workforce in the medium term” of those 20,000 people.
The staff of the subsidiary in Mexico and other businesses for sale are excluded from this calculation. Ultimately, the group's workforce will be reduced by 60,000 jobs to reach 180,000 by the end of 2026, according to its financial director, Mark Mason. This includes the 20,000 layoffs, as well as the 40,000 employees that will be deconsolidated by taking its Mexican subsidiary, Banamex, public and spinning off.
The announcement of cost-saving measures comes after a disappointing fourth quarter, in which Citigroup's fixed income business posted its worst results in five years.
“Although the fourth quarter was very disappointing due to the impact of notable elements, we have made substantial progress in simplifying Citi and executing our strategy in 2023,” Fraser said in the results release. “We have restructured around five interconnected core businesses to align our organization with our strategy and provide greater transparency into their performance,” he added. “Given how far we are down the path of our simplification and divestments, 2024 will be a turning point,” he explained.
Citi's revenue fell 3% year-over-year in the fourth quarter, to $17.44 billion, according to the accounts presented this Friday. The bank has broken down the results of its five businesses: services, markets, banking, personal banking in the United States and wealth, which were previously grouped into broader divisions.
Income from the markets area fell 19% in the quarter compared to the previous year, to $3.41 billion due to a 25% drop in fixed income income due to the sluggishness of the interest rate and currency markets, as well as Argentina's losses. For the year as a whole, they fell 6%, to 18,857 million.
In contrast, wholesale banking division revenue increased 22% to $949 million, driven by higher investment banking fees for debt and advisory capital markets, which grew 27% to $669 million. dollars and offset the fall in loans to companies. For the year as a whole, the investment banking business grew by 1%, to 2,510 million, and the corporate banking business fell 4%, to 2,473 million.
In personal banking in the US, revenue increased 12%, to $4.94 billion, driven by retail banking and credit cards. During the year it is also one of the most buoyant divisions, with an increase in income of 14%, up to 19,187 million.
In the wealth and heritage management business, revenue fell 3% in the quarter, to $1,671 million, and 5% in 2023 as a whole, to $7,091 million; while in services they increased by 6%, to 4,500 million in the quarter and 16%, to 18,050 million in the year.
While JPMorgan has closed 2023 with record profits and Wells Fargo and Bank of America have saved the rate, Citi's accounts have been affected not only by a worse operating evolution, but also by the cleaning of the balance sheet, including adjustments for its operations in Argentina and Russia and its part of the bill for the sanitation of the banks that had to be rescued by the deposit guarantee fund, to which Citi has to contribute an extra 1.7 billion dollars.
Citigroup has taken advantage of the results of the fourth quarter of 2023 to clean up its balance sheet. Among the write-offs and provisions for some 4,660 million dollars that it has made in its accounts, there are 1,600 million dollars (about 1,460 million euros) related to Argentina, according to advanced on Wednesday. The bank has recorded write-offs in Russia and the 1.7 billion for the deposit guarantee fund. Additionally, it recorded approximately $780 million in restructuring charges in the quarter, largely driven by severance, non-cash asset impairments and other related charges, as part of Citi's implementation of its organizational simplification initiatives and administration from year-end 2023. CEO Jane Fraser is trying to streamline and increase Citigroup's profitability, in part by cutting staff and exiting retail businesses around the world.
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