UPDATE: Jan. 18, 2022: About 150 Citi employees were being placed on leave for not meeting the bank's Jan. 14 COVID-19 vaccine reporting deadline, The Wall Street Journal reported Saturday, citing an anonymous source. However, they could keep their jobs if they comply by the end of the month, the person said.
Dive Brief:
- Profit at Citi fell 26% in 2021’s fourth quarter — to $3.2 billion from $4.3 billion a year earlier, the bank reported Friday.
- The bank also announced a restructuring that combines its U.S. consumer and global wealth management division under one umbrella, breaks its institutional operations into three units — trading, investment and corporate banking, and services — and creates a “legacy franchises” segment that will house assets from which Citi has chosen to exit.
- Despite the quarterly drop, Citi’s profit for all of 2021 nearly doubled — to $22 billion — while revenue saw a 5% downturn to $71.9 billion.
Dive Insight:
The biggest dip for Citi came from the consumer side, where profit cratered by 42% — accentuated by an 18% jump in operating expenses, to $13.5 billion over the quarter. About $1.2 billion of that represents the bank’s wind-down of operations in South Korea.
Citi’s burgeoning exit from 14 markets spurred the bank to create a “legacy franchises” segment to help investors better gauge progress in its retreat from global consumer banking.
To that end, Citi agreed to sell its consumer-banking businesses in Indonesia, Malaysia, Thailand and Vietnam to Singapore-based United Overseas Bank for about $3.6 billion, the bank announced late Thursday.
That means the bank still needs to find buyers for its retail operations in India, China, Russia, Taiwan, Poland and Bahrain, as well as Mexico — a market from which Citi said this week it intended to withdraw.
Citi CEO Jane Fraser on Friday called the Mexico move “the final decision related to the refresh of our strategy.”
“We continue to transform our bank with a focus on simplification and building a culture of excellence,” she said. “We have seen the resilience and importance of Citi as we have supported our clients through uncharted waters and we will continue to serve them with pride.”
Double-digit swells and losses
Among the biggest swells the bank reported Friday was from mergers-and-acquisition underwriting and advisement. The bank’s investment-banking unit saw a 43% jump in fees it collected in the fourth quarter. Citi also saw a 20% increase in spending on the credit cards it issues.
Double-digit percentage-point losses elsewhere, however, tempered those gains. Trading revenue fell 17% in the quarter, driven by a 20% drop in fixed-income markets revenue.
The bank released $1.4 billion of its loan-loss reserves over the quarter, bringing to almost $5 billion the total it freed during the year. Citi set aside $17.5 billion in 2020.
Vaccine deadline
Apart from the earnings and restructuring news, Friday also marked the deadline for Citi's office-based employees to comply with the bank’s mandate to upload their vaccination card showing proof of inoculation against COVID-19 or request an exemption. The bank said last week it would place unvaccinated or unreported employees on unpaid leave Jan. 15 and terminate them Jan. 31.
Citi intends to stick with the deadline despite a Supreme Court ruling Thursday blocking the enforcement of vaccination mandates for businesses with 100 or more employees, Fox Business reported.
Sara Wechter, Citi’s head of human resources, said in a LinkedIn post Thursday that 99% of the bank’s U.S. employees have complied with the mandate.
“Going into the last day, we expect the number of employees who have not complied will decrease even further,” she wrote. “Our goal has always been to keep everyone at Citi, and we sincerely hope all of our colleagues take action to comply.”
