1.8-billion-dollar loss; Citi Bank lay off 20,000 employees

A prominent consortium of banks, including those based in New York, has disclosed challenging fourth-quarter performances attributed to the impact of the SVB and Signature rescue efforts.

On Friday, Citigroup revealed its plans to reduce its workforce by 20,000 positions following a $1.8 billion loss city bank in the last quarter.

The New York-headquartered bank, with a current staff of 240,000, expects these job cuts to be implemented over the next two years. The disclosure in Wednesday’s filing attributed the fourth-quarter loss to approximately $3.8 billion in charges and reserve builds, along with reorganization expenses.

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Citigroup faced a challenging fourth quarter, disclosing a $1.3 billion provision for reserve builds in Argentina and Russia due to currency devaluations and political instability. Additionally, the bank reported a $1.7 billion payment to replenish the Federal Deposit Insurance Corporation (FDIC) fund, which suffered depletion following the collapse of Silicon Valley Bank (SVB) and Signature Bank last year.

CEO Jane Fraser expressed disappointment with the fourth-quarter results, emphasizing 2024 as a pivotal year for the company’s strategic focus on its five core businesses. Despite a 3% dip in revenue to $17.4 billion compared to the previous year, Citigroup’s attention to business consolidation is evident.

The broader impact of the SVB and Signature Bank collapses reverberated across the banking sector, affecting the profits of other major U.S. banks. Bank of America and JPMorgan Chase, grappling with the aftermath of the regional banking crisis, paid FDIC fees of $2.1 billion and $2.9 billion, respectively. JPMorgan’s reported earnings per share stood at $3.04, and without the FDIC payment, it would have been closer to $3.97.

Wells Fargo, contending with a $1.9 billion payment for the FDIC special assessment, reported a net income of $3.4 billion in the fourth quarter. Looking ahead, Citigroup and other banks acknowledged the sensitivity of their business performance to interest rates and the overall health of the U.S. economy but expressed confidence that strategic actions would yield stronger returns over the economic cycle, particularly as the economy strengthens and interest rates rise in 2023.