Citigroup to Reduce Workforce by 20,000 in Strategic Overhaul

Financial giant Citigroup (NYSE:C) has announced a major workforce reduction plan, proposing to cut around 20,000 jobs, which represents 10% of its employees, over a period of two years. This decision is part of an ongoing transformation strategy under CEO Jane Fraser, who has been at the helm since March 2021. The initiative illustrates the company's commitment to streamlining its operations and enhancing efficiencies.

Strategic Exits and Simplification

With Fraser's ascension to the CEO position, Citigroup began a process of re-aligning its business. This included the exit from retail banking operations in about twelve countries. In addition, the firm has been actively working towards reducing management levels to simplify its organizational structure, making it more agile.

Implications of Banamex Spinoff

Citigroup's CFO, Mark Mason, disclosed to journalists that the company plans to offload its Mexican consumer banking division, Banamex, through an initial public offering. This action is expected to decrease the workforce by another 40,000. Mason's comments suggest a significant operational shift, focusing the company's direction towards more streamlined, efficiency-driven goals.

Focusing on a Lean Workforce

As 2023 concluded, Citigroup reported having around 240,000 employees. Their target is to reduce this number to approximately 180,000 by the end of 2026. Mason reassured that the diminution in staff would not impact the bank's capacity for revenue growth.

Financial Sacraments and Future Projections

Citigroup has taken substantial restructuring charges approximating $780M in the fourth quarter of 2023. Looking ahead into 2024, Citigroup estimates it will incur severance and reorganization-related expenses of around $700M to $1.0B. However, the bank anticipates a reduction in overall expenses from $54.3B in 2023 to between $53.5B and $53.8B in 2024. In terms of revenue, Citigroup expects to see an increase to between $80B and $81B, discounting market fluctuations and divestitures, up from $78.5B in 2023. Targeted growth areas include treasury and trade solutions, securities services, and retail services.

Market Reaction

Following the announcement, Citigroup's stock experienced an initial surge, increasing by up to 3.4% in Friday morning trading. However, gains were trimmed as stock value stabilized to 0.6% higher later in the morning.

Citigroup, JobCuts, Restructuring