In its 2024 financial report, Citigroup announced a significant restructuring plan that includes cutting 20,000 jobs over the next two years, which is equivalent to 8% of its global workforce. This move is a direct response to the company's $1.8 billion loss in the fourth quarter, reflecting the company is currently facing the financial challenges.
This round of layoffs is part of Citigroup's multi-year effort to reduce bureaucracy, improve efficiency, and enhance a stock price that lags behind industry competitors. The layoff plan will not consider the 40,000 positions associated with its Mexican consumer business, Banamex, in its upcoming initial public offering. This means that Citigroup's final headcount will be reduced to about 180,000.
Despite the substantial losses, analysts point out that if one-off costs are excluded, Citigroup's core business still shows resilience. The main reasons for the losses include one-off costs of $3.8 billion, covering restructuring expenses, reserves related to the devaluation and instability of currencies in Argentina and Russia, and $1.7 billion for augmenting the Federal Deposit Insurance Corporation's fund.
Citigroup expects to incur costs of $700 million to $1 billion related to layoffs and restructuring in 2024. CFO Mark Mason acknowledges that the layoffs will affect employee morale but emphasizes that it will not hinder revenue growth. Citigroup will also announce additional organizational changes in the coming weeks. Fraser revealed that the simplification of structures will be completed this quarter, expected to save $1 billion and cut about 5,000 positions, mainly in management.
This restructuring strategy is seen as a key step in Citigroup's long-term transformation and competitiveness enhancement. However, the market harbors reservations about Citigroup's ability to implement the restructuring plan successfully and achieve growth in its core business. Analysts and the market will continue to closely monitor Citigroup's performance in meeting challenges and achieving its long-term strategic goals.
