Citigroup (C) - Get Citigroup Inc. Report will resume slashing its workforce this week, joining some of its rivals including Wells Fargo (WFC) - Get Wells Fargo & Company Report that are now reducing headcount in a bid to rein in costs ahead of what is anticipated to be a rising wave of business and personal loan losses.
The cuts will affect less than 1% of the global workforce, and likely will be offset by recent hiring for other positions throughout the company, the bank said in a statement. The bank said it has hired more than 26,000 people globally this year.
“The decision to eliminate even a single colleague role is very difficult, especially during these challenging times,” Citigroup said in a statement, released late Monday. “We will do our best to support each person, including offering the ability to apply for open roles in other parts of the firm and providing severance packages.”
The job cuts come as banks brace for what is expected to be both a drop in revenue and an increase in loan losses as the pandemic and economic downturn continue to take its toll on business and consumer lending, particularly as government aid and other payment deferral programs expire.
It also comes ahead of what is expected to be a heavy reprimand for Citigroup not being on top of its own risk-management systems. The Office of the Comptroller of the Currency and the Federal Reserve are both weighing public rebukes of Citigroup because of continued deficiencies in its infrastructure and control functions, according to reports.
Specifically, regulators have faulted Citigroup's C-suite for not making risk management in its capital markets and investing divisions more stringent - something highlighted in a recent $900-million mistake involving lenders to Revlon (REV) - Get Revlon, Inc. Class A Report that is also believed to have accelerated the retirement of long-time CEO Michael Corbat.
Citigroup last week announced that Jane Fraser will succeed Corbat as head of the bank effective the end of 2020. Corbat, who has run the bank since 2012, had been expected to retire sometime around 2022. Fraser, who started her career at Goldman Sachs, will become the first woman to lead a major U.S. bank.
Shares of Citigroup were down 2.87% at $46.77 in trading on Tuesday. The stock ended down 5.6% at $48.15 in regular New York trading on Monday, the worst performer in the 66-company S&P 500 Financials Index.