Citigroup is set to eliminate 5,000 jobs by the end of the month, primarily in investment banking and trading, following a prolonged decline in dealmaking.
The bank, still struggling to recover from the financial crisis over a decade ago, has already laid off thousands of employees since the beginning of the year. An informed source suggests that hundreds more will be informed that their positions are being eliminated by the end of June.
These job cuts account for 2% of Citigroup’s total workforce. Chief Financial Officer Mark Mason announced the layoffs at an investor conference on Wednesday and warned that severance expenses related to 1,600 of the dismissals will impact second-quarter earnings.
Mason highlighted that expenses, including severance costs and other restructuring charges, could increase by up to $400 million in the second quarter compared to the previous three months. He emphasized that Citigroup is investing in technology to enable operations with fewer employees, stating, “We remain committed to cost reduction and efficiency gains, which sometimes entails reducing headcount.”
Mason also predicted a 20% decrease in Citi’s trading business revenue for the second quarter compared to the same period last year. This decline is partly attributed to a slowdown in trading during May due to uncertainty surrounding the US debt ceiling.
Citi, in the process of reducing its consumer banking operations outside the US, had 240,000 employees worldwide at the end of March, up from 228,000 a year earlier. As a result of these developments, Citi’s shares fell by 0.9%.
Citigroup is the latest bank to announce job cuts this year, as the finance industry experiences its worst wave of layoffs since the financial crisis. The cuts reflect bank executives’ belief that an excessive number of employees were hired during the peak of dealmaking in the pandemic and that the current slump in mergers and stock and bond offerings is likely to continue.
Last month, Morgan Stanley announced 3,000 job cuts, equivalent to approximately 5% of its workforce. Goldman Sachs has also reduced its headcount by a similar figure this year and indicated the possibility of further cuts.
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