Citigroup Inc. (NYSE: C) has unveiled plans to slash 20,000 jobs.
The decision, spearheaded by CEO Jane Fraser, aims to bolster the financial giant’s performance, which has been underwhelming recently.
The bank anticipates the cuts will lead to substantial savings, potentially reaching $2.5 billion. As part of this overhaul, Citigroup has projected a decrease in overall expenses, aiming for $51 billion to $53 billion by 2026.
However, the bank is bracing for up to $1 billion in costs this year, primarily due to severance and restructuring expenses, reported Bloomberg.
The restructuring announcement follows a challenging quarter for Citigroup, particularly in its fixed-income trading sector. The bank’s revenue in this area plummeted by 25% to $2.6 billion, largely due to a decline in client activity towards the end of the year.
“The fourth quarter was very disappointing,” Fraser said. “Given how far we are down the path of our simplification and divestitures, 2024 will be a turning point.”
Following the restructuring news, Citigroup’s shares experienced a rise of over 1.5% in New York. This increase came after a previous 1.8% drop, which was a reaction to the bank’s announcement of substantial one-time charges related to its restructuring and economic challenges in Argentina and Russia.
The bank is set to commence these job eliminations starting the week of Jan. 22, with completion expected by the end of the first quarter.
Fraser’s restructuring is anticipated to yield annual savings of $1 billion for Citigroup, primarily by eliminating 5,000 managerial roles.
“We are moving quickly, but we are doing it thoughtfully,” Fraser reportedly stated in a memo to employees.
Additionally, Fraser reiterated her commitment to improving the bank’s return on tangible common equity, targeting at least 11% by 2027.
The restructuring and job cuts are expected to reduce Citigroup’s overall headcount by 60,000, bringing it down to 180,000 by the end of 2026. This includes the departure of 40,000 employees following the IPO of its consumer banking businesses in Mexico.
Citigroup’s fourth-quarter results reflected a loss of $1.8 billion, or $1.16 per share, including several one-time charges. These charges encompassed a $780 million severance expense for employees affected by the restructuring.
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