Citigroup Cuts 20,000 Jobs Amid Warning Signs of Layoffs at Other Banks

Citigroup, the parent company of Citibank, announced Friday that it plans to cut 20,000 jobs over the next two years as part of restructuring plans instituted by chief executive officer (CEO) Jane Fraser to simplify operations at the bank.

Fraser told employees in November that the bank planned to "eliminate regional layers" as part of its reorganization to streamline its business, according to a memo to employees obtained by The Wall Street Journal. On Friday, the company said in a presentation on its results that the organizational simplification will lead to "the net reduction in reported headcount of 20k over the medium term."

Newsweek contacted Citigroup for comment via email on Friday afternoon.

The job losses come amid reports that other banks may be embarking in job cuts as well, even as analysts say the loss of workers at Citigroup is specific to the company.

"There are certainly going to be some layoffs at other banks, no doubt. Goldman Sachs is trimming here and there, Wells Fargo is pulling back, but nothing compared to the scale of Citigroup—this is unique," Octavio Marenzi, CEO of consultancy firm Opimas, told Newsweek on Friday.

On Friday, as part of its results announcement for the fourth quarter of 2023, Wells Fargo revealed that its personnel expense was up $766 million and "included total severance expense of $1.1 billion, $969 million of which was for planned actions." These costs could be for layoffs, Reuters reported Friday.

In its results presentation, Wells Fargo showed that its headcount went down in 2023 to 226,000 from 239,000 at the end of the fourth quarter of 2022.

"While most of the planned actions should result in lower headcount, some of the actions are related to our workforce location strategy," Mike Santomassimo, Wells Fargo's chief financial officer, said in an earnings call on Friday. "Through our efficiency initiatives we have reduced headcount every quarter since third quarter of 2020 and headcount is down 16 percent since the end of 2020."

Wells Fargo referred to the earnings call to Newsweek on Friday afternoon when contacted for comment.

Meanwhile, Goldman Sachs has also been shedding jobs, according to recent reports, that may have led to thousands losing employment at the investment bank.

Newsweek contacted Goldman Sachs on Friday afternoon for comment via email.

News of headcount reduction in the banking sector comes amid other jobs losses this week from high profile companies such as Amazon and investment firm BlackRock. Analysts have told Newsweek that the cuts do not necessarily signal the beginning of mass layoffs in the larger economy.

Economists say that job openings continue to be elevated and companies are still looking for workers. Data from the U.S. Bureau of Labor Statistics (BLS) also shows that even in the financial activities sector, a category that includes finance and the insurance business, the unemployment rate remains low at under 2.5 percent as of last month.

The job market currently shows that three sectors in health care, government and leisure and hospitality are leading in jobs creation over the last few months, Yelena Maleyev, a senior economist at KPMG, told Newsweek. Employers added 216,000 jobs in December and the unemployment rate stayed at 3.7 percent, according to the BLS last Friday.

"This is expected to continue as they were the slowest to catch up to the level last seen before the pandemic," she added.

While the labor market was expected to cool, Maleyev forecasted a soft landing for the U.S. economy. This scenario implies even in an environment of high rates instituted by the Federal Reserve to slow inflation, prices will moderate without the hiking of rates doing too much damage to jobs.

"This year's job market will see a softening in hiring, but mass layoffs across the board are not expected," Maleyev told Newsweek. "This is our forecast based on a soft landing scenario."