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Citigroup (C) Cuts Jobs Across IB and Mortgage Divisions

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Citigroup Inc. (C - Free Report) has initiated a round of job cuts, wherein it is cutting hundreds of jobs across the firm, which account for less than 1% of its total workforce. According to people familiar with the matter, who asked not to be identified as the information is private, the company’s investment banking (“IB”) division, its operations and technology organization, and the U.S. mortgage-underwriting division are among those affected.

The cuts are part of Citigroup’s normal business planning and there has not been any broad mandate for managers to trim the workforce.

In its investment banking division, the company is struggling because of an industry-wide slowdown in deal-making. Citigroup recorded a 53% decline in IB revenues last year, with additional declines expected in the first quarter of 2023.

Then again, Citigroup’s mortgage division has been grappling with reduced mortgage demand because of rising prices and a rapid increase in mortgage rates. In its mortgage division, which is largely based in O’Fallon, MO, the bank already dismissed dozens of workers last year.

Notably, Citigroup has spent billions of dollars in its technology division in recent years to upgrade its underlying infrastructure. CEO, Jane Fraser, said that the investments would ultimately allow the bank to reduce its reliance on manual processes.

In January, Fraser stated, “As our investment in transformation and control initiatives mature, we expect to realize efficiency as those programs transition from manually intensive processes to technology-enabled ones.”

With the latest job cuts, Citigroup joins rivals like JPMorgan Chase (JPM - Free Report) and Bank of America (BAC - Free Report) . JPM also cut hundreds of its mortgage employees, while BofA cut around half a dozen Hong Kong-based investment banking jobs as part of its global downsizing in investment banking.

Notably, amid the job cuts, Citigroup continues to hire and build teams dedicated to resolving a pair of consent orders received in 2020 from the Office of the Comptroller of the Currency and the Federal Reserve.

Fraser said, “We continue to invest in our transformation to address our consent orders and to modernize our bank. We’re streamlining our processes and making them more automated, whilst improving the quality and accessibility of our data. This will make us a better bank.”

Over the past six months, shares of Citigroup have gained 5.2% compared with the industry’s growth of 9.9%.

 

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Currently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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