Citi to lay off 20,000 employees after posting $1.8bn loss

New York group among major banks reporting struggling fourth quarters due to SVB and Signature rescue

The bank, which employs 240,000 people, said the layoffs will be made throughout the next two years. Getty Images
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Citigroup announced on Friday that it will cut 20,000 jobs after posting a $1.8 billion loss last quarter.

The New York-based bank, which employs 240,000 people, said the layoffs will be made throughout the next two years.

In a filing on Wednesday, Citi disclosed the fourth-quarter loss was driven by roughly $3.8 billion in combined charges and reserve builds, as well as reorganisation expenses.

It reported $1.3 billion in reserve builds for Argentina and Russia because of currency devaluations and political instability.

Citi also reported a $1.7 billion payment to replenish the Federal Deposit Insurance Corporation (FDIC) fund that dried up after the collapse of Silicon Valley Bank (SVB) and Signature Bank last year.

Chief executive Jane Fraser called the fourth quarter “very disappointing” and said that 2024 “will be a turning point” as the group focuses on its five businesses.

Revenue dipped 3 per cent to $17.4 billion from a year earlier. Markets revenue decreased 19 per cent to $3.4 billion, driven by a decline in fixed income and the impact of Argentina's currency devaluation.

SVB and Signature collapses drag down big banks' profits

Other big US banks showed smaller profits in the fourth quarter, according to earnings statements, largely driven by last year's regional banking crisis.

Bank of America and JP Morgan Chase paid FDIC fees for the crisis of $2.1 billion and $2.9 billion, respectively.

JPMorgan's earnings came in at $3.04 per share. Without the FDIC payment, the bank said its earnings per share would have been closer to $3.97.

Wells Fargo, which paid $1.9 billion to the FDIC special assessment, reported a net income of $3.4 billion in the fourth quarter.

“As we look forward, our business performance remains sensitive to interest rates and the health of the US economy, but we are confident that the actions we are taking will drive stronger returns over the cycle,” chief executive Charlie Scharf said in the bank's earnings release.

Mr Scharf also said the bank's 2023 results benefit from a strong economy and higher interest rates.

Updated: January 12, 2024, 7:25 PM