Citigroup is set to undergo a significant workforce reduction, with CFO Mark Mason revealing on Friday that the bank plans to lay off 20,000 employees over the next two years. This decision follows the disclosure of a $1.8 billion net loss for the fourth quarter of 2023, marking the institution’s worst quarter in 15 years.
The bank anticipates that the reduction in headcount will yield long-term savings of $2.5 billion. Despite estimates projecting a loss of 11 cents per share, Citi reported a substantial earnings loss of $1.16 per share for the fourth quarter, attributing the disparity to several one-time costs. These included a $1.7 billion charge related to the regional banking crisis, an $880 million loss in Argentina, and $800 million in restructuring costs linked to approximately 7,000 layoffs in 2023.
The layoffs are integral to Citigroup CEO Jane Fraser’s broader initiative to streamline the company and enhance profitability. Fraser expressed disappointment in the latest results during a Friday morning call but conveyed optimism, dubbing 2024 as a “turning point year” for the nation’s third-largest lender.
Mason acknowledged the challenges posed by such workforce reductions on morale but emphasized the firm’s clear strategy and anticipated momentum. In addition to the 20,000 job cuts, Citigroup announced plans to divest 40,000 employees from its Mexican retail unit through an IPO, bringing the total headcount down to approximately 180,000 from 240,000.
As part of the planned restructuring, the bank foresees paying up to $1 billion in severance pay and reorganization costs over the next few years. The layoffs are global in scope, and the bank declined to provide a region-specific breakdown.
Citigroup CEO Jane Fraser had initially unveiled her comprehensive restructuring efforts in September, outlining intentions to revamp leadership, enhance accountability, and elevate the share price, all requiring a more streamlined workforce.