Citigroup's Major Shake-Up: 20,000 Jobs Cut Amid $1.8B Loss and Banamex Spin-Off

Announcement Context

Citigroup announced the job cuts after reporting a significant loss of $1.8 billion in the fourth quarter of 2023.

Reduction Scale

The job cuts represent about 10% of Citigroup's workforce, aiming to reduce its staffing level to approximately 180,000 employees.

Financial Charges

The loss was partly due to $3.8 billion in charges, including reorganization expenses and a reserve related to currency devaluations in Argentina and Russia.

Spin-off Impact

Additionally, Citigroup will no longer count 40,000 jobs related to its Mexican consumer unit Banamex, which is expected to be spun off and listed separately.

Underlying Business Resilience

Despite the loss, analysts noted that Citigroup's underlying business showed resilience when one-off charges were excluded.

Severance Costs

The bank expects to incur between $700 million and $1 billion in charges in 2024, related to severance and reorganization.

Morale Concerns

The staffing cuts, especially in such large numbers, are expected to impact employee morale within the organization.

Organizational Changes

Citigroup plans to announce more organizational changes, focusing on simplifying its structure and aiming for significant cost savings.

Revenue Performance

The bank experienced a 3% decline in revenue to $17.4 billion in the quarter, with varied performance across its different business segments.

Execution Challenges

There are concerns about Citigroup's ability to effectively execute this restructuring while growing its core business.