Citigroup announced that it would eliminate 20,000 positions over the following two years in response to a "clearly disappointing" quarter that included one-time costs that cost the company $1.8 billion.
The bank's shares, which have increased by more than 1%, is in the midst of a multi-year endeavour to reduce bureaucracy, enhance earnings, and strengthen a stock that has underperformed rivals.
"The fourth quarter was very clearly disappointing," CEO Jane Fraser told analysts. "We know that 2024 is critical."
The lender, which employs 239,000 people worldwide, will lay off 20,000 workers, or approximately 8% of the workforce, as a result of the extensive restructuring, Chief Financial Officer Mark Mason informed reporters.
When Citi spins off and lists its Mexican consumer unit Banamex in a future initial public offering, it will also stop counting 40,000 positions. Mason stated that Citi eventually wants to reach a workforce level of 180,000 employees.
Even yet, a few analysts stated that after removing the one-time charges, the third-largest U.S. lender by assets had solid profits.
"Citigroup's earnings looked awful with a big loss of $1.8 billion, but the bank's underlying business showed resilience," said Octavio Marenzi, CEO at management consultancy firm Opimas.
The $3.8 billion in charges, which included reorganisation costs, a reserve for currency devaluations and instability in Argentina and Russia, and a $1.7 billion payment to top off a government deposit insurance fund, were the main causes of the loss, as revealed in a filing on Wednesday.
This year, the bank anticipates reporting charges relating to the reorganisation and severance expenses of between $700 million and $1 billion.
"Whenever an industry or company goes through these types of reductions, it’s tough on morale," Mason told reporters. The staffing cuts will not affect revenue growth, he said.
A staff document seen by Reuters states that the bank would make other organisational changes public during the week of January 22. This quarter, the majority of its structural simplification efforts will be finished, saving $1 billion and removing roughly 5,000 primarily management positions, according to Fraser.
Friday saw reduced quarterly profits from rivals JPMorgan Chase and Bank of America, while Wells Fargo outperformed in terms of cost reductions.
Comparing the same quarter to last year, Citi's revenue decreased by 3% to $17.4 billion. For the first time, the bank separated its profits into the five categories of services, markets, banking, wealth, and U.S. personal banking. These categories were previously grouped together under larger divisions.
The trading division's revenue, or markets revenue, decreased 19% to $3.4 billion from the previous year. It was pulled down by losses from Argentina and a 25% decline in fixed income revenue as a result of weak exchange rates and currency markets.
On the other hand, investment banking fees for debt capital markets and advisory services increased 22% to $949 million in banking revenue, offsetting a decline in corporate lending.
Thanks in part to retail banking and credit cards, U.S. personal banking revenue increased by 12% to $4.9 billion.
However, stress indicators from customers have started to surface, which is why Citi decided to increase its reserves to offset losses on soured loans.
"The restructuring announced two months ago was a long time coming," said Chris Marinac, director of research at Janney Montgomery Scott. "The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out."
(Source:www.usnews.com)
The bank's shares, which have increased by more than 1%, is in the midst of a multi-year endeavour to reduce bureaucracy, enhance earnings, and strengthen a stock that has underperformed rivals.
"The fourth quarter was very clearly disappointing," CEO Jane Fraser told analysts. "We know that 2024 is critical."
The lender, which employs 239,000 people worldwide, will lay off 20,000 workers, or approximately 8% of the workforce, as a result of the extensive restructuring, Chief Financial Officer Mark Mason informed reporters.
When Citi spins off and lists its Mexican consumer unit Banamex in a future initial public offering, it will also stop counting 40,000 positions. Mason stated that Citi eventually wants to reach a workforce level of 180,000 employees.
Even yet, a few analysts stated that after removing the one-time charges, the third-largest U.S. lender by assets had solid profits.
"Citigroup's earnings looked awful with a big loss of $1.8 billion, but the bank's underlying business showed resilience," said Octavio Marenzi, CEO at management consultancy firm Opimas.
The $3.8 billion in charges, which included reorganisation costs, a reserve for currency devaluations and instability in Argentina and Russia, and a $1.7 billion payment to top off a government deposit insurance fund, were the main causes of the loss, as revealed in a filing on Wednesday.
This year, the bank anticipates reporting charges relating to the reorganisation and severance expenses of between $700 million and $1 billion.
"Whenever an industry or company goes through these types of reductions, it’s tough on morale," Mason told reporters. The staffing cuts will not affect revenue growth, he said.
A staff document seen by Reuters states that the bank would make other organisational changes public during the week of January 22. This quarter, the majority of its structural simplification efforts will be finished, saving $1 billion and removing roughly 5,000 primarily management positions, according to Fraser.
Friday saw reduced quarterly profits from rivals JPMorgan Chase and Bank of America, while Wells Fargo outperformed in terms of cost reductions.
Comparing the same quarter to last year, Citi's revenue decreased by 3% to $17.4 billion. For the first time, the bank separated its profits into the five categories of services, markets, banking, wealth, and U.S. personal banking. These categories were previously grouped together under larger divisions.
The trading division's revenue, or markets revenue, decreased 19% to $3.4 billion from the previous year. It was pulled down by losses from Argentina and a 25% decline in fixed income revenue as a result of weak exchange rates and currency markets.
On the other hand, investment banking fees for debt capital markets and advisory services increased 22% to $949 million in banking revenue, offsetting a decline in corporate lending.
Thanks in part to retail banking and credit cards, U.S. personal banking revenue increased by 12% to $4.9 billion.
However, stress indicators from customers have started to surface, which is why Citi decided to increase its reserves to offset losses on soured loans.
"The restructuring announced two months ago was a long time coming," said Chris Marinac, director of research at Janney Montgomery Scott. "The question comes down to: Can they execute on this restructuring in terms of really being able to grow the core business? The jury is still out."
(Source:www.usnews.com)
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