Citigroup Inc. Chief Financial Officer Mark Mason said the firm’s recent job cuts will cause expenses to climb by as much as $400 million this quarter compared with the first three months of the year.
The New York-based bank expects to record severance costs tied to the departure of 1,600 employees in the second quarter, which mostly affected its investment-banking and trading divisions, Mason said Wednesday at a Morgan Stanley conference in New York. So far this year, the firm has set aside severance for 5,000 employees affected by the cuts, he said.
“We remain expense-disciplined around driving costs out,” Mason said. “Sometimes that means reducing headcount.”
Separately, Mason warned that trading revenue has dropped 20% so far this quarter after the Congressional debate over the debt ceiling weighed on client activity for much of the period. Revenue from the firm’s investment-banking division has dropped about 25% so far this quarter, in line with industry levels, he said.
“The debt-ceiling concerns certainly did weigh on the investor client base, in particular in April and May,” Mason said. “We haven’t seen volatility or activity pick up in the early days of June.”
Wall Street’s trading desks have been contending with a slowdown in volatility from a year ago, when central-bank interest-rate hikes and Russia’s invasion of Ukraine spurred activity across markets. Citigroup’s markets division brought in roughly $5.29 billion in revenue in last year’s second quarter, compared with the $805 million generated by the firm’s investment bankers in the same period.
Last month, Citigroup announced it now plans to sell shares of its Banamex unit in an initial public offering, ending talks for a potential sale to a local buyer in a deal that faced complications from Mexico’s president. The decision allowed the US bank to restart stock buybacks this quarter, and Mason said Wednesday that the firm expects to repurchase about $1 billion in shares for the period.
(Updates with additional CFO commentary in third and last paragraphs.)
