The reductions will affect less than 1% of the bank’s global workforce, the company said Monday in a statement. With recent hiring, overall headcount probably won’t decline, Citigroup said.
Citigroup is facing a likely revenue drop and another increase to loan-loss reserves this quarter as the pandemic drags on, as well as years of expenses to improve risk controls. The Office of the Comptroller of the Currency and the Federal Reserve are weighing public reprimands of the firm because of continued deficiencies in its infrastructure and control functions, people familiar with the matter said Monday.
“The decision to eliminate even a single colleague role is very difficult, especially during these challenging times,” Citigroup said in the statement. “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.”
Read more: Citi said to face possible , Fed action on risk control
The bank said it has hired more than 26,000 people this year, and over one-third of those jobs were in the U.S. The lender had roughly 204,000 employees at the end of the second quarter.
Some U.S. banks have resumed job cuts in recent weeks after pledging, en masse, to pause such actions earlier this year. European firms including HSBC Holdings Plc and Deutsche Bank AG had restarted reductions in May and June after also delaying. The pandemic’s continued weight on the economy is threatening lenders with higher credit costs and crimping revenue growth.
Chief Financial Officer Mark Mason said Monday that the bank is hoping to keep expenses flat to slightly up this quarter as persistently low interest rates and a slowdown in consumer spending have weighed on the bank’s results.
While revenue from fixed-income and equities trading is likely to climb by a percentage in the low double digits in the third quarter, firmwide revenue will probably still fall, Mason said. The lender will also likely have to set aside more in reserves to cover potential losses in the third quarter.
Citigroup dropped 4.3% to $46.09 at 9:55 a.m. in New York trading. The firm’s shares dropped 5.6% yesterday, the worst performance in the 66-company S&P 500 Financials Index, after Mason’s comments and the report of potential regulatory actions. It marked the stock’s worst two-day decline since June.