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Citigroup (C) to Eliminate 20,000 Jobs, Enhance Performance
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Citigroup Inc. (C - Free Report) is planning to eliminate 20,000 job positions, excluding its workforce in Mexico, over the medium term. As the company announced net loss of $1.8 billion for fourth-quarter 2023, the decision will help improve its performance. In fact, these job cuts would result in savings of approximately $2-$2.5 billion over the medium term.
For 2024, C expects adjusted expenses to be approximately in the range of $53.5-$53.8 billion, down from $54.3 billion projected previously. The decline is likely to have been driven by organizational simplification benefits, exit from various international businesses, and elimination of non-viable segments like municipal business and a subset of its distressed debt trading. These will be partially offset by the company’s increased investments in risk and controls.
Such measures will help C to focus on its core strengths, thereby improving its results in the upcoming period.
However, the organization's revamp involving the layoff of approximately 5000 employees in the managerial position will likely inflate severance costs as well as additional potential costs of around $700 million to $1 billion. This is included in the above expense guidance for 2024.
The firm intends to reduce its management layers from 13 to eight. It expects to optimize the first four layers of the organization by the end of this month, thus completing phase three of the plan. This involves a net reduction of around 1500 managerial positions. It expects to complete its organizational simplification initiative by the end of first-quarter 2024.
Such optimization of management layers and reduction in functional roles will reduce bureaucracy, drive accountability and make decision-making process swifter, thereby enabling increased client satisfaction.
The expense reduction initiatives by Citigroup along with its business transformational plans will help it navigate through a tough operating backdrop. Notably, it completed divestitures of nine out of its 14 international consumer franchises by the end of 2023. Further, it has wound down almost 70% of its total 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) . The completion of this deal is expected in the first half of 2024. As a result of the sale, C will transfer assets under management and deposits worth approximately $3.6 billion to HSBC.
Citigroup has restarted its sales process in Poland and also remains on track to execute an IPO for its Mexico business in 2025. Hence, these initiatives along with its efforts to expand operations will likely drive top-line growth in the upcoming period.
Citigroup’s shares have risen 28.5% in the past three months compared with the industry’s 19.3% growth.
Last week, Reuters reported that BlackRock, Inc. (BLK - Free Report) was planning to eliminate 600 job positions. This accounts for nearly 3% of the company’s total global workforce.
Despite this elimination, BLK remained positive about its growth prospects. By the end of 2024, the company expects to employ more workforce, as it plans to expand certain parts of its business.
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Citigroup (C) to Eliminate 20,000 Jobs, Enhance Performance
Citigroup Inc. (C - Free Report) is planning to eliminate 20,000 job positions, excluding its workforce in Mexico, over the medium term. As the company announced net loss of $1.8 billion for fourth-quarter 2023, the decision will help improve its performance. In fact, these job cuts would result in savings of approximately $2-$2.5 billion over the medium term.
For 2024, C expects adjusted expenses to be approximately in the range of $53.5-$53.8 billion, down from $54.3 billion projected previously. The decline is likely to have been driven by organizational simplification benefits, exit from various international businesses, and elimination of non-viable segments like municipal business and a subset of its distressed debt trading. These will be partially offset by the company’s increased investments in risk and controls.
Such measures will help C to focus on its core strengths, thereby improving its results in the upcoming period.
However, the organization's revamp involving the layoff of approximately 5000 employees in the managerial position will likely inflate severance costs as well as additional potential costs of around $700 million to $1 billion. This is included in the above expense guidance for 2024.
The firm intends to reduce its management layers from 13 to eight. It expects to optimize the first four layers of the organization by the end of this month, thus completing phase three of the plan. This involves a net reduction of around 1500 managerial positions. It expects to complete its organizational simplification initiative by the end of first-quarter 2024.
Such optimization of management layers and reduction in functional roles will reduce bureaucracy, drive accountability and make decision-making process swifter, thereby enabling increased client satisfaction.
The expense reduction initiatives by Citigroup along with its business transformational plans will help it navigate through a tough operating backdrop. Notably, it completed divestitures of nine out of its 14 international consumer franchises by the end of 2023. Further, it has wound down almost 70% of its total 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) . The completion of this deal is expected in the first half of 2024. As a result of the sale, C will transfer assets under management and deposits worth approximately $3.6 billion to HSBC.
Citigroup has restarted its sales process in Poland and also remains on track to execute an IPO for its Mexico business in 2025. Hence, these initiatives along with its efforts to expand operations will likely drive top-line growth in the upcoming period.
Citigroup’s shares have risen 28.5% in the past three months compared with the industry’s 19.3% growth.
Image Source: Zacks Investment Research
C presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Another Company Undertaking Similar Move
Last week, Reuters reported that BlackRock, Inc. (BLK - Free Report) was planning to eliminate 600 job positions. This accounts for nearly 3% of the company’s total global workforce.
Despite this elimination, BLK remained positive about its growth prospects. By the end of 2024, the company expects to employ more workforce, as it plans to expand certain parts of its business.