Citigroup Inc. (NYSE:C) has unveiled plans to eliminate 20,000 job positions, excluding its Mexico workforce, in the medium term. The move comes in response to the company’s reported net loss of $1.8 billion for the fourth quarter of 2023, to enhance overall performance. These job cuts are anticipated to generate savings of approximately $2-$2.5 billion over the medium term.
For the year 2024, Citigroup expects adjusted expenses to fall within the range of $53.5-$53.8 billion, a decrease from the previously projected $54.3 billion. The decline is attributed to the benefits of organizational simplification, exit from various international businesses, and the elimination of non-viable segments such as the municipal business and a subset of distressed debt trading. These savings will be partially offset by increased investments in risk and controls.
While the restructuring involves the layoff of approximately 5,000 managerial positions, it is expected to incur severance costs and additional potential expenses ranging from $700 million to $1 billion. This is factored into the above expense guidance for 2024.
Citigroup plans to reduce its management layers from 13 to eight, optimizing the first four layers by the end of this month, marking the completion of phase three of the plan. This phase involves a net reduction of around 1,500 managerial positions. The company aims to finalize its organizational simplification initiative by the end of the first quarter of 2024.
Streamlining management layers and reducing functional roles are strategic steps to minimize bureaucracy, enhance accountability, and expedite decision-making processes. The goal is to ultimately improve client satisfaction.
Citigroup’s expense reduction initiatives, coupled with its broader business transformation plans, are designed to navigate through a challenging operating environment. The company completed divestitures of nine out of its 14 international consumer franchises by the end of 2023 and significantly wound down its retail loans and deposits in Russia, Korea, and China.
In October 2023, Citigroup agreed to sell its China-based onshore consumer wealth portfolio to HSBC Holdings plc (HSBC), with the completion of the deal expected in the first half of 2024. This move will involve transferring assets under management and deposits worth approximately $3.6 billion to HSBC.
Additionally, Citigroup has initiated the sales process in Poland and is on track to execute an IPO for its Mexico business in 2025. These strategic initiatives, combined with efforts to expand operations, are anticipated to drive top-line growth. Citigroup’s shares have reflected positive investor sentiment, rising by 28.5% in the past three months compared to the industry’s growth of 19.3%.
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