Citigroup, one of the largest banking corporations in the world, announced today that it will reduce its US workforce by 20,000 employees over the next two years. This decision comes as part of a restructuring plan aimed at cutting costs and improving efficiency in the face of increased competition and regulatory pressures.
The company said that the layoffs will affect various divisions and locations across the US but did not provide specific details on which roles or regions will be impacted. Citigroup said that it will offer severance packages and outplacement services to the affected employees, and that it will try to minimize the disruption to its customers and operations.
Citigroup CEO Jane Fraser said in a statement that the move was necessary to adapt to the changing market conditions and customer preferences. She said that the company will focus on investing in its core businesses and digital capabilities, as well as enhancing its risk management and compliance functions.
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“We are taking these difficult but decisive actions to position Citigroup for long-term growth and profitability,” Fraser said. “We are grateful for the contributions of our colleagues who will be leaving us, and we will support them throughout this transition.”
The announcement comes as Citigroup faces several challenges, including a $400 million fine from US regulators for failing to address longstanding deficiencies in its risk and control systems, a $900 million payment error that resulted in a legal dispute with some of its creditors, and a decline in its net income by 34% in the third quarter of 2020 compared to the same period in 2019.
Citigroup is not the only bank that has resorted to layoffs amid the pandemic-induced economic downturn. Earlier this year, Wells Fargo said that it would cut up to 10% of its workforce, or about 26,000 employees, over three years. Bank of America and JPMorgan Chase have also reduced their headcounts by 3% and 1%, respectively, since the end of 2019.
To provide more details on the impact of the layoffs, Citigroup said that it expects to incur about $1 billion in pre-tax charges related to severance and other expenses in the fourth quarter of 2020 and the first half of 2021. The company also said that it expects to generate about $2 billion in annual savings from the workforce reduction by 2023.
Citigroup said that it will continue to serve its customers across its four main business segments: global consumer banking, institutional client’s group, corporate/other, and Citi Holdings. The company said that it will also continue to pursue its environmental, social and governance (ESG) goals, such as achieving net zero greenhouse gas emissions by 2050 and advancing racial equity within its organization and communities.
As for the impact on Citigroup’s stock price, the market reaction was mixed. The shares closed at $53.02 on January 10, 2024, up 1.8% from the previous day. However, they were still down 3.2% from their 52-week high of $54.75 reached on December 13, 2023. Some analysts expressed concern about the potential loss of revenue and market share from the layoffs, while others praised the company’s efforts to streamline its operations and improve its profitability.
