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Citigroup (C) CEO Jane Fraser is betting a dramatic restructuring can revive the lender’s stock price and remove decades of bloat. On Friday she disclosed how deep those cuts will go.
The New York bank said that it expects to eliminate 20,000 positions by 2026, which will save it $2.5 billion. It also intends to shed another 40,000 when it lists its Mexican consumer unit Banamex in an initial public offering.
That would leave Citigroup with 180,000 workers, which would likely make it the smallest of the big four banks in the US and reduce the overall size of its workforce by 25%. It ended 2023 with 240,000.
JPMorgan Chase (JPM) currently employs more than 300,000, while Bank of America (BAC) and Wells Fargo (WFC) have more than 200,000 apiece.
“Look, whenever whenever an industry or company goes through these types of reductions, it’s tough on morale,” Citigroup CFO Mark Mason told reporters. “With that said I would I would point to the fact that we’ve been very clear about the strategy of the firm and very clear about the momentum that we expect.”
The disclosure came on a day when Citigroup reported a net loss of $1.8 billion in the fourth quarter resulting from an FDIC assessment of $1.7 billion and other charges and reserves it previously disclosed. Its stock was down 1% in morning trading.
CEO Jane Fraser called the results “very disappointing” but said “we made substantial progress simplifying Citi and executing our strategy in 2023.” This year, she added, would be a “turning point.”
Fraser is trying to focus the company on serving big, multinational corporations, shed what isn’t profitable, and operate more efficiently.
The job cuts are part of an internal restructuring that Fraser has called the “most consequential” change to how Citigroup operates in nearly two decades.
Citi has pulled back from consumer banking in various parts of the world, having sold off nine of those businesses with plans to exit a total of 14 across Asia, Europe, the Middle East, Africa, and Mexico.
It is also getting out of its US municipal bond business, dismantling yet another part of an empire amassed in the 1990s when Citigroup and its CEO Sandy Weill billed the bank as a “financial supermarket” that could offer any and all services needed by consumers, businesses, and governments.
The high point of this model was an era-defining 1998 merger between Citicorp and Travelers that shattered a Depression-era division between retail banking and investment banking and cemented Citigroup’s status as the world’s largest financial institution.
In the decades since 1998, the colossus amassed by Weill proved to be too complex and unwieldy to manage effectively, and the 2008-2009 financial crisis dealt another blow to its sweeping ambitions. The company began to slowly unwind parts of the empire.
Fraser first revealed her reorganization plans last September. Instead of operating with two mega-divisions, she is splitting the bank into five separate units with leaders reporting directly to her. She made it clear this would mean fewer people.
“We’ll be saying goodbye to some very talented and hard-working colleagues,” Fraser wrote when she announced the moves in September.
The first layoffs began in November, affecting senior managers. Those cuts amounted to roughly 10% of senior manager roles, or approximately 300 managers, Bloomberg reported.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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