Citigroup, the third-largest bank in the U.S., is planning to simplify its organization, and that includes dropping 20,000 employees in the “medium term.”
The restructuring is part of Citigroup CEO Jane Fraser’s new business model, which was announced in September 2023, and the new revelation comes at a time when the bank also reported a net loss of $1.8 billion in the fourth quarter.
Related: Twitch CEO announces 'difficult' decision, and its content creators aren’t happy
Citigroup is expecting that the 20,000 reduction in headcount will reduce the company’s expenses by up to $2.5 billion. Even though the move may reduce costs, Citigroup is also expecting to take a $700 million to $1 billion hit due to severance and other costs related to the restructuring.
When announcing future layoffs in September last year, Fraser said that the change will remove “unnecessary complexity” at the company.
“These changes eliminate unnecessary complexity across the bank, increase accountability for delivering excellent client service and strengthen our ability to benefit from the natural linkages that exist amongst our businesses, all with an eye toward delivering on our medium-term targets and our Transformation,” said Fraser in a press release.
The year 2024, which has been only two weeks long, has so far kicked off with a plethora of layoffs from large organizations. For example, on Jan. 10 Amazon announced hundreds of job cuts on the same day that Google announced that it has shrunk its headcount by hundreds across its hardware and engineering teams.
Many companies have cited cost-cutting and reprioritizing their businesses as the reasoning behind the recent layoffs.
Citigroup has recently faced an increase in expenses that has taken a negative toll on its pockets. The bank has reported its fourth-quarter earnings for 2023 which shows that the company garnered a revenue of $17.4 billion during the quarter, but took a major loss of $18.7 billion which the bank attributed to a multitude of costs. Some of the fees include $780 million from severance and other reorganization efforts, $1.3 billion in charges related to a “transfer risk” in Russia and Argentina, a $1.7 billion FDIC special assessment and other fees.
Fraser has called her company’s earnings for the fourth-quarter “very disappointing” but claims that the bank has made “substantial progress” in “simplifying” its organization in 2023, according to its fourth-quarter earnings press release.
Investing can be hard. We make it easier. There are thousands of stocks you can invest your hard-earned money in. Our pros help you decide what stocks to buy and when to buy them. Sign up to find out what stocks we're buying now
