The news: Citi is the latest Wall Street lender to rethink headcount in its investment banking arm as it aims to trim costs amid a prolonged deal slowdown, CFO Mark Mason told Bloomberg.
M&A dearth spurs layoffs: Investment banking redundancies are not uncommon during periods of dwindling deals and Citi is not alone in making cuts. But the latest round of layoffs is likely to be one of the biggest to hit the banking sector since the financial crisis.
Profit squeeze forces strategy shift: Banks are under pressure to trim costs to shore up their bottom lines, and layoffs are a straightforward way to achieve this. Citi had a disappointing 2022 in which profits narrowed 32% year on year (YoY) to $14.8 billion. But the bank is also embracing more radical plans to improve its financial health and in response to a $400 million fine for risk management failures.
The verdict: Citi is embracing the job cuts that investment banks usually employ in market slumps but also investing in new approaches to drive growth.
However, Citi's long-term approach could reap success compared to rivals focused on immediate cost-cutting by trimming headcount.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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