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Citigroup (C) Seeks 286 Job Cuts of New York-Based Employees
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Citigroup Inc. (C - Free Report) will lay off 286 New York City-based employees, according to three notices that the company filed with the State Labor Department.
The workforce reduction is set to take effect before May 3. It will comprise 239 employees in the primary banking unit, 44 in the global markets broker-dealer units and three in a technology unit, according to the Worker Adjustment and Retraining Notifications.
This is in line with the company’s plans to shed 20,000 positions by 2026, as it continues its largest revamp in a decade and a half.
The firm intends to reduce its management layers from 13 to eight. It expects to complete its organizational simplification initiative by the end of first-quarter 2024.
Such optimization of management layers and reduction in functional roles will reduce bureaucracy, drive accountability and make the decision-making process swifter, thereby enabling increased client satisfaction.
As the company announced a net loss of $1.8 billion for fourth-quarter 2023, the decision will help improve its performance. These job cuts are expected to result in savings of $2-$2.5 billion over the medium term.
For 2024, C expects adjusted expenses of $53.5-$53.8 billion, down from $54.3 billion mentioned previously. The decline is likely to be driven by organizational simplification benefits, exits from various international businesses, and the elimination of non-viable segments like municipal business and a subset of its distressed debt trading. These will be partially offset by the company’s increased investments in risk and controls.
Such measures will help C focus on its core strengths, thereby improving its results in the upcoming period.
However, the organization's revamp, involving the layoff of approximately 5000 employees in managerial positions, will likely inflate severance costs and additional costs between $700 million and $1 billion. This is included in the above expense guidance for 2024.
Citigroup’s shares have risen 17.2% in the past three months compared with the industry’s 14.3% growth.
Morgan Stanley (MS - Free Report) planned to lay off hundreds of workers from its wealth management division, a move that is expected to impact less than 1% of the unit’s employees. The news was first reported by the Wall Street Journal, citing a person with knowledge of the matter.
The move comes as MS, like several other Wall Street firms, seeks to reduce costs amid economic uncertainty and concerns regarding the trajectory of interest rate cuts by the Federal Reserve.
Last month, it came to light that BlackRock (BLK - Free Report) has been planning to eliminate 600 jobs, accounting for 3% of the company’s total global workforce. The move is part of BLK’s efforts to streamline operations and adapt to a rapidly changing operating environment.
Despite the elimination, BlackRock remains positive about its growth prospects. By the end of 2024, the company expects to employ more workforce, as it plans to expand certain parts of its business.
In a memo to its staff, BLK’s CEO Larry Fink and president Rob Kapito wrote, “We see our industry changing faster than at any time since the founding of BlackRock. And, perhaps most profound, new technologies are poised to transform our industry – and every other industry.”
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Citigroup (C) Seeks 286 Job Cuts of New York-Based Employees
Citigroup Inc. (C - Free Report) will lay off 286 New York City-based employees, according to three notices that the company filed with the State Labor Department.
The workforce reduction is set to take effect before May 3. It will comprise 239 employees in the primary banking unit, 44 in the global markets broker-dealer units and three in a technology unit, according to the Worker Adjustment and Retraining Notifications.
This is in line with the company’s plans to shed 20,000 positions by 2026, as it continues its largest revamp in a decade and a half.
The firm intends to reduce its management layers from 13 to eight. It expects to complete its organizational simplification initiative by the end of first-quarter 2024.
Such optimization of management layers and reduction in functional roles will reduce bureaucracy, drive accountability and make the decision-making process swifter, thereby enabling increased client satisfaction.
As the company announced a net loss of $1.8 billion for fourth-quarter 2023, the decision will help improve its performance. These job cuts are expected to result in savings of $2-$2.5 billion over the medium term.
For 2024, C expects adjusted expenses of $53.5-$53.8 billion, down from $54.3 billion mentioned previously. The decline is likely to be driven by organizational simplification benefits, exits from various international businesses, and the elimination of non-viable segments like municipal business and a subset of its distressed debt trading. These will be partially offset by the company’s increased investments in risk and controls.
Such measures will help C focus on its core strengths, thereby improving its results in the upcoming period.
However, the organization's revamp, involving the layoff of approximately 5000 employees in managerial positions, will likely inflate severance costs and additional costs between $700 million and $1 billion. This is included in the above expense guidance for 2024.
Citigroup’s shares have risen 17.2% in the past three months compared with the industry’s 14.3% growth.
Image Source: Zacks Investment Research
C presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Job Cuts by Other Finance Firms
Morgan Stanley (MS - Free Report) planned to lay off hundreds of workers from its wealth management division, a move that is expected to impact less than 1% of the unit’s employees. The news was first reported by the Wall Street Journal, citing a person with knowledge of the matter.
The move comes as MS, like several other Wall Street firms, seeks to reduce costs amid economic uncertainty and concerns regarding the trajectory of interest rate cuts by the Federal Reserve.
Last month, it came to light that BlackRock (BLK - Free Report) has been planning to eliminate 600 jobs, accounting for 3% of the company’s total global workforce. The move is part of BLK’s efforts to streamline operations and adapt to a rapidly changing operating environment.
Despite the elimination, BlackRock remains positive about its growth prospects. By the end of 2024, the company expects to employ more workforce, as it plans to expand certain parts of its business.
In a memo to its staff, BLK’s CEO Larry Fink and president Rob Kapito wrote, “We see our industry changing faster than at any time since the founding of BlackRock. And, perhaps most profound, new technologies are poised to transform our industry – and every other industry.”