Citigroup to incur $1 billion in severance and reorganization costs in 2024

As Citigroup Inc. continues the process of eliminating 20,000 roles as part of Chief Executive Officer Jane Fraser’s quest to boost its lagging returns, the Wall Street giant says that it expects to incur as much as $1 billion in severance and reorganization costs this year.  

The New York-based bank said that the total expenses for the year will likely be between $53.5 billion and $53.8 billion. That would be a decrease from the $56.4 billion the firm spent in 2023. 

The outlook for cost savings helped mask a disappointing fourth quarter, when Citigroup’s fixed-income traders turned in their worst performance in five years. Notably, the rates and currencies business was stung by a slump in client activity in the final weeks of the year, while revenue from the business slumped 25% to $2.6 billion. 

“The fourth quarter was very disappointing,” Fraser said in the statement. “Given how far we are down the path of our simplification and divestitures, 2024 will be a turning point.” 

Fraser in September initiated the biggest restructuring of Citigroup in decades as she seeks to improve the bank’s returns. She said the moves will allow the bank to eliminate bureaucracy, slimming it down from 13 management layers to just eight. 

Fraser has also said the overhaul would help her boost a key measure of profitability known as return on tangible common equity to at least 11% by 2027 at the latest, while she reiterated that medium-term guidance.