Citigroup will have cut 5,000 jobs by the end of the month, mostly in investment banking and trading, after a prolonged slump in dealmaking.
The bank, which is still struggling to regain its footing more than a decade after the financial crisis, has already dismissed thousands of employees since the start of the year. A person familiar with the cuts said hundreds more were expected to be told by the end of June that their jobs have been eliminated.
The cuts, which represent 2 per cent of the bank’s overall staff, were announced by chief financial officer Mark Mason at an investor conference on Wednesday. He warned that severance costs related to 1,600 of the dismissals would crimp second-quarter earnings.
Mason said job losses cheques along with other “restructuring or repositioning charges” would increase expenses by as much as $400mn in the second quarter compared with the first three months of the year.
He said Citigroup was investing in technology that would mean it could operate with fewer employees. “We remain expense disciplined around driving cost out and capturing efficiencies,” Mason said. “And sometimes that means reducing headcount.”
He also predicted that revenues in Citi’s trading business were likely to have fallen 20 per cent in the second quarter compared with the same period of last year, in part because of a slowdown in trading in May caused by brinkmanship in Washington over the US debt ceiling.
Citi, which is in the process of reducing its consumer banking presence outside of the US, had 240,000 employees worldwide at the end of the March, up from 228,000 a year earlier. Citi’s shares fell 0.9 per cent.
Citi is the latest bank to announce job cuts this year during what has been the worst period for Wall Street dismissals since the great financial crisis. The cuts underscore bank executives’ belief that they hired too many people during an increase in dealmaking during the pandemic and that the recent chill in mergers and stock and bond offerings is likely to continue.
Last month, Morgan Stanley announced 3,000 job cuts, representing about 5 per cent of its staff. Goldman Sachs has reduced its headcount by a similar number this year and has indicated more cuts are likely.