Citigroup is currently facing a dual dilemma of performance and stock price, and the company's CEO has launched the largest restructuring action in 20 years.
Last Friday (January 12th), Citigroup stated in its fourth quarter performance report that approximately 20000 employees will be laid off in the "medium term". The bank had previously used the term "mid-term" to refer to a term of three to five years.
As of the end of 2023, Citigroup had approximately 200000 employees, excluding the ongoing spin off of its Mexican business (Banamex, a retail bank in Mexico). This also means that this layoff will involve 10% of the company's employees.
Citigroup also wrote in the footnote of its report that if the company chooses not to hire outsourced employees in the future, the scale of layoffs of 20000 people may be "slightly lower".
A new wave of layoffs
Last year, Bank of America became a major disaster area for layoffs. In the context of stagnant income, the US banking industry led by Wells Fargo and Goldman Sachs has launched a wave of layoffs to reduce costs. However, Citigroup is an alternative, including its Mexican business, with a total of around 240000 employees for the entire year of 2023.
Since the 2008 financial crisis, due to the previous CEO's inability to control expenses, Citigroup has been lagging behind its peers, making it the least valued bank among the six major banks in the United States.
In order to address this dilemma, Jane Fraser, the current CEO of Citigroup, announced in September last year that she would undertake a comprehensive reform of the bank, which ranks third in the United States in terms of asset size. The internal code name of the plan is Project Bora Bora.
In November last year, it was reported that the managers and consultants responsible for the restructuring plan had discussed layoffs of at least 10% in several major businesses.
Afterwards, Citigroup has implemented several rounds of layoffs, with the first step being to start with senior bank managers. It is reported that the details of the next round of restructuring plan are expected to be announced on January 22nd.
"Turning point"
Citibank turned from profit to loss in the fourth quarter of 2023, with a net loss of $1.839 billion, compared to a net profit of $3.546 billion in the previous quarter and $2.513 billion in the same period last year. Citigroup also expects a moderate decline in revenue this year compared to last year.
Fraser stated in a statement, "The fourth quarter was very disappointing, and given that we have come some distance on the path of simplification, 2024 will be a turning point."
The financial report released on Friday also showed that it included $780 million in expenses related to the Fraser restructuring plan (including severance pay and other expenses) in the fourth quarter, and may include an additional $1 billion in 2024.
The bank stated that over time, these layoff measures may help reduce costs by up to $2.5 billion.
According to an insider, considering the prospect of thousands of layoffs in the coming years, some Citigroup employees are using vacation or sick leave to look for their next position.
The person said, "Some senior vice presidents I know are on vacation, but maybe they will never come back again."