Citigroup, one of the largest banks in the United States, has recently revealed its plans to cut approximately 10% of its workforce in a strategic move aimed at bolstering the bank’s financial performance and stock price. This decision was disclosed in a presentation tied to the bank’s fourth-quarter earnings report, released on a Friday in New York. While the exact duration of the “medium term” was not specified, Citigroup has historically used this term to refer to a period spanning three to five years.
As of the end of 2023, Citigroup boasted a workforce of around 200,000 employees, excluding its Mexican operations, which were in the process of being divested, according to the presentation. The CEO of Citigroup, Jane Fraser, had previously announced a comprehensive overhaul of the bank in September, recognizing that the institution had lagged behind its peers since the 2008 financial crisis. The root cause of this underperformance lay in Citigroup’s inability to effectively manage its expenses. Consequently, the bank had the lowest valuation among the six largest banks in the United States.
Reports of an impending workforce reduction began to surface in November, with managers and consultants engaged in the initiative referred to internally as “Project Bora Bora” discussing the possibility of a 10% reduction in several major business divisions. Subsequently, Citigroup initiated several rounds of layoffs, initially targeting top-level positions within the bank. Another round of job cuts is scheduled for January 22nd, as confirmed by an anonymous source familiar with the matter. Citigroup’s official spokesperson declined to comment on these developments.
The banking industry in the United States has been witnessing a trend of downsizing throughout the past year, largely driven by the need to reduce costs in the face of stagnant revenue growth. Notably, Wells Fargo and Goldman Sachs had already initiated substantial staff reductions. However, Citigroup stood out as an exception, maintaining its staffing levels at approximately 240,000 for the entirety of 2023, inclusive of its Mexican operations.
In response to the restructuring efforts led by CEO Jane Fraser, announced a charge of $780 million in the fourth quarter of the year. Additionally, the bank has indicated that it may incur another $1 billion in severance and related expenses in 2024. These strategic moves are expected to contribute to a substantial reduction in costs, potentially amounting to as much as $2.5 billion over time, as highlighted by Citigroup.
In a notable footnote within the presentation, Citigroup suggested that the projected 20,000 job cuts could be marginally lower if the bank chooses to utilize internal resources instead of outsourcing certain functions. This implies a degree of flexibility in their approach to workforce reduction, demonstrating a willingness to adapt as circumstances evolve.
However, the looming prospect of thousands of additional job cuts over the next few years has caused some employees to take proactive measures. According to an anonymous source close to the matter, certain employees are utilizing vacation time or seeking mental health leave as they explore opportunities outside the bank. This trend is indicative of the uncertainty and apprehension prevalent among staff, with some individuals opting to depart from the organization entirely.
In summary, Citigroup’s decision to reduce its workforce by 10% as part of a broader restructuring initiative underscores the bank’s commitment to improving its financial performance and stock price. CEO Jane Fraser’s overhaul aims to address longstanding issues related to expenses that have left trailing behind its industry peers. While these measures come with associated costs and challenges, they are anticipated to yield substantial long-term benefits, including significant cost savings. However, the impact on employees and their job security remains a concern, as evidenced by some individuals taking preemptive steps to explore alternative career options amidst the ongoing workforce reductions at Citigroup.