Finance

Citigroup said it was cutting 10% of its workforce in a bid to help boost the embattled bank’s results and stock price.
In November, CNBC reported that managers and consultants involved in CEO Jane Fraser’s restructuring discussed job cuts of 10%.
The company has since executed several waves of layoffs, with another round of cuts set for Jan. 22, according to a source.

Citigroup CEO Jane Fraser at the World Economic Forum in Davos, Switzerland, on Jan. 17, 2023.
Adam Galica | CNBC

Citigroup said it was cutting 10% of its workforce in a bid to help boost the embattled bank’s results and stock price.
About 20,000 employees will be let go over the “medium term,” New York-based Citigroup said Friday in a slideshow tied to fourth-quarter earnings. While it wasn’t immediately clear how long that is, the bank has previously used that term to denote a three- to five-year period.

Citigroup had roughly 200,000 workers at the end of 2023, excluding Mexican operations that are in the process of being spun out, according to the presentation.
Citigroup CEO Jane Fraser announced a sweeping overhaul of the third-largest U.S. bank by assets in September. The company has been left behind by peers since the 2008 financial crisis as Fraser’s predecessors couldn’t get a handle on expenses and is the lowest valued among the six biggest U.S. banks.
In November, CNBC reported that managers and consultants involved in the effort — known internally by the code name “Project Bora Bora” — discussed job cuts of 10% in several major businesses.

Next round of cuts

The company has since executed several waves of layoffs, beginning with the top layers of the bank, with another round of cuts set for Jan. 22, according to a person familiar with the matter. A Citigroup spokeswoman declined to comment.
American banks have been trimming jobs all throughout the past year, led by Wells Fargo and Goldman Sachs, to lower costs amid stagnant revenue. Citigroup had been a notable outlier, maintaining staffing levels at around 240,000 for all of 2023, including its Mexico operations.

Citigroup said Friday it booked a $780 million charge in the fourth quarter tied to Fraser’s restructuring project, and that it may post another $1 billion in severance and other expenses in 2024. The moves could help trim up to $2.5 billion in costs over time, the bank said.

Permanent vacation

In a footnote to its presentation, Citigroup said the 20,000 job cuts could be “slightly lower” if it chooses to use internal resources rather than outsource functions.
Given the outlook for thousands of more job cuts over the next few years, some Citigroup employees are using vacation time or mental health leave to search for their next position, said the person familiar with the matter, who declined to be identified speaking about personnel matters.
“People are looking aggressively,” the person said. “I know senior VPs who are on vacation now, but they’re never coming back.”

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Hedge fund billionaire Bill Ackman said Friday that he’s starting an activist organization to fight antisemitism and reform higher education.
The Pershing Square Capital CEO was one of the loudest critics of Harvard, his alma mater, as well as the University of Pennsylvania and the Massachusetts Institute of Technology, after Hamas’ Oct. 7 attack on Israel, charging their presidents with not taking a strong stance against antisemitism on campus.

Hedge fund billionaire Bill Ackman, who recently fought a high-profile battle against Harvard University, said Friday that he’s starting an activist organization to fight antisemitism and reform higher education.
“It’s going to be a ‘think-and-do tank.’ It’s going to be an activist,” Ackman said in an interview with CNBC’s Andrew Ross Sorkin on “Squawk Box.” “I’m standing up an organization very shortly to focus on precisely what’s going on. … We’re going to study these issues. And we’re going to come up with solutions to problems and we’re going to implement.”

The Pershing Square Capital CEO was one of the loudest critics of Harvard, his alma mater, as well as the University of Pennsylvania and the Massachusetts Institute of Technology, after Hamas’ Oct. 7 attack on Israel, charging their presidents with not taking a strong stance against antisemitism on campus.
Harvard president Claudine Gay later resigned following sharp criticism of her testimony before Congress in early December where she and other academic leaders were grilled over tolerance of antisemitism on campus. In addition, Gay faced accusations of plagiarism in her own published work.
Ackman’s fight took a turn when online publication Business Insider posted a story that included similar accusations of plagiarism against his wife, Neri Oxman, who is an architect, designer and a former professor at MIT.
“It started with antisemitism on campus, and then I got concerned about governance at Harvard. … Then I have broader concerns about higher education generally,” Ackman said. “I think these are very important issues. And these are issues that will require resources to be focused on.”
Ackman, whose Pershing Square oversees nearly $15 billion in assets under management, said he’s going to hire a CEO and put together a board of directors for the new organization.

“This kind of activism now requires… a serious team,” Ackman said. “We’re going to go after these issues in a very aggressive way.”Don’t miss these stories from CNBC PRO: More

Jane Fraser, CEO of Citigroup, attends a hearing on Annual Oversight of Wall Street Firms before the Senate Committee on Banking, Housing, and Urban Affairs in Washington, D.C., the United States, on Dec. 6, 2023. 
Tom Williams | Cq-roll Call, Inc. | Getty Images

Citigroup reported fourth-quarter earnings before the opening bell Friday.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG, formerly known as Refinitiv, were expecting:

Earnings: adjusted 84 cents a share, may not compare with expected 81 cents
Revenue: $17.44 billion, vs. expected $18.74 billion

Citigroup CEO Jane Fraser announced plans for a sweeping corporate reorganization in September after previous efforts failed to boost the bank’s results and share price.
The bank has said it will disclose how much the overhaul will impact headcount and reduce expenses with fourth-quarter results. Wednesday evening, the company said it booked bigger charges in the quarter than previously disclosed.
Citigroup has already said it would exit municipal bond and distressed debt trading operations as part of the streamlining exercise.
The third biggest U.S. bank by assets had 240,000 employees as of September, second only to the far more profitable JPMorgan Chase.
JPMorgan and Bank of America posted results earlier Friday, while Goldman Sachs and Morgan Stanley report Tuesday.
This story is developing. Please check back for updates. More

Wells Fargo shares fell Friday even after fourth-quarter profit rose from a year ago, as the bank warned that net interest income for 2024 could come in significantly lower year over year.
Here’s what the bank reported versus what Wall Street was expecting based on a survey of analysts by LSEG, formerly known as Refinitiv:

·       Revenue: $20.48 billion vs. $20.30 billion expected
Wells Fargo’s stock fell 1% before the bell.
Total revenue came in at $20.48 billion for the period. That’s a 2% increase from the fourth quarter of 2022 when Wells Fargo posted $20.3 billion in revenue. The bank also posted net income of $3.45 billion, or 86 cents per share, up slightly from $3.16 billion, or 75 cents a share a year ago.
Earnings were lowered by a $1.9 billion charge from a FDIC special assessment and a $969 million charge from severance expenses. Wells Fargo also recorded a $621 million, or 17 cents per share, tax benefit.
“As we look forward, our business performance remains sensitive to interest rates and the health of the U.S. economy, but we are confident that the actions we are taking will drive stronger returns over the cycle,” said Chief Executive Officer Charlie Scharf in a release. “We are closely monitoring credit and while we see modest deterioration, it remains consistent with our expectations.”

Wells Fargo said net interest income fell 5% from a year ago to $12.78 billion, and warned that the figure could come in 7% to 9% lower for the year from $52.4 billion in 2023. The decline in net interest income was due to lower deposit and loan balances, but offset slightly by higher interest rates, the bank said.
Provisions for credit losses rose 34% to $1.28 billion from $957 million a year ago, as allowances for credit losses rose for credit card and commercial real estate loans. Wells Fargo said that was partially offset by lower allowances for auto loans.
Wells Fargo shares are virtually flat this year after rallying more than 19% in 2023. During the period the 10-year Treasury yield topped the 5% threshold in October, before finishing the year below 3.9%.
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The bank said quarterly earnings slipped 15% to $9.31 billion, or $3.04 per share, from a year earlier.
Excluding the fee tied to the regional banking crisis and $743 million in investment losses, earnings would have been $3.97 per share, according to JPMorgan.

Jamie Dimon, Chairman of the Board and Chief Executive Officer of JPMorgan Chase & Co., gestures as he speaks during an interview with Reuters in Miami, Florida, U.S., February 8, 2023. 
Marco Bello | Reuters

JPMorgan Chase said Friday that fourth quarter profit declined after paying a $2.9 billion fee tied to the government seizures of failed regional banks last year.
Here’s what the company reported vs. what analysts surveyed by LSEG, formerly known as Refinitiv, expected:

Earnings per share: $3.04, may not compare with expected $3.32
Revenue: $39.94 billion, vs. expected $39.78 billion

The bank said quarterly earnings slipped 15% to $9.31 billion, or $3.04 per share, from a year earlier. Excluding the fee tied to the regional banking crisis and $743 million in investment losses, earnings would have been $3.97 per share, according to JPMorgan.
Revenue climbed 12% to $39.94 billion, edging out analysts’ expectations.
JPMorgan CEO Jamie Dimon said full-year results hit a record because the largest U.S. bank by assets performed better than expected on net interest income and credit quality. The bank said it generated nearly $50 billion of profit in 2023, $4.1 billion of which came from First Republic.
Just as it did in the 2008 financial crisis, JPMorgan emerged larger and more profitable from last year’s regional banking chaos after acquiring First Republic, a midsized lender to wealthy coastal families. The Federal Deposit Insurance Corporation hit large U.S. banks with a special assessment to replenish losses from a fund that helped uninsured depositors of seized regional banks.
Despite his bank’s performance, Dimon struck a cautious note on the American economy.

“The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing,” Dimon said in the release.
But deficit spending and supply chain adjustments “may lead inflation to be stickier and rates to be higher than markets expect,” he said. Risks to markets and economies include central banks’ steps to rein in support programs and wars in Ukraine and the Middle East, he added.
“These significant and somewhat unprecedented forces cause us to remain cautious,” he said.
While the biggest U.S. bank by assets has navigated the rate environment capably since the Federal Reserve began raising rates in early 2022, smaller peers have seen their profits squeezed.
The industry has been forced to pay up for deposits as customers shift cash into higher-yielding instruments, squeezing margins. At the same time, rising yields mean the bonds owned by banks fell in value, creating unrealized losses that pressure capital levels.
Concern is also mounting over rising losses from commercial loans, especially office building debt, and higher defaults on credit cards.
Beyond guidance on net interest income and loan losses for this year, analysts will want to hear what Dimon has to say about banks’ efforts to tone down coming increases in capital requirements.
Beaten-down shares of banks recovered in November on expectations that the Fed had successfully managed inflation and could cut rates this year.
Shares of JPMorgan jumped 27% last year, the best showing among big bank peers and outperforming the 5% decline of the KBW Bank Index.
This story is developing. Please check back for updates. More

Bank of America shares fell about 2% in premarketing trading on Friday after the firm reported declining fourth-quarter earnings amid hefty one-time charges.
Here’s what the company reported compared with Wall Street expectations:

Earnings per share: 70 cents adjusted vs. 68 cents per share expected, according to LSEG, formerly known as Refinitiv
Revenue: $22 billion, adjusted, unclear if the figure is comparable to analyst estimates

Bank of America said its net income fell to $3.1 billion, or 35 cents per share, in the fourth quarter, down more than 50% from $7.1 billion, or 85 cents per share, a year ago.
The bank, based in Charlotte, North Carolina, said it was hit by a pretax charge of $1.6 billion in the quarter related to the transition away from the London Interbank Offered Rate. The results also included a special $2.1 billion fee charged by Federal Deposit Insurance Corp. The fee is tied to the failures of Silicon Valley Bank and Signature Bank. Excluding items, the company said it earned 70 cents per share.
“We reported solid fourth quarter and full-year results as all our businesses achieved strong organic growth, with record client activity and digital engagement,” CEO Brian Moynihan said in a statement. “Our expense discipline allowed us to continue investing in growth initiatives. Strong capital and liquidity levels position us well to continue to deliver responsible growth in 2024.”
The nation’s second-largest bank posted a $1.1 billion provision for credit losses, up by $12 million from the same quarter last year.
Bank of America said its net interest income decreased 5% to $13.9 billion due to higher deposit costs and lower deposit balances, which more than offset higher asset yields.

The bank was supposed to be one of the biggest beneficiaries of higher interest rates last year, but it has underperformed its peers because the lender had piled into low-yielding, long-dated securities during the Covid pandemic. Those securities lost value as interest rates climbed.
Revenue from consumer banking dipped 4% to $10.3 billion, while sales and trading revenue went up by 3% to $3.6 billion.
Bank of America stock is down more than 1% this year after a mere 1.7% gain in 2023. The S&P 500 financial sector gained 10% last year. More

BlackRock, the world’s biggest asset manager, announced Friday it is buying Global Infrastructure Partners for about $12 billion in cash and stock.
The acquisition is part of the firm’s increased focus on infrastructure, which CEO Larry Fink said is “one of the most exciting long-term investment opportunities.” As part of the deal, GIP’s management team will lead a combined infrastructure private markets investment platform at BlackRock.

The deal is expected to close in the third quarter of this year.
BlackRock also announcing it will embed its ETF and Index businesses across the entire firm with the creation of a new strategic Global Product Solutions business.
“This platform is set to be the preeminent, one-stop infrastructure solutions provider for global corporates and the public sector, mobilizing long-term private capital through long-standing firm relationships,” said Bayo Ogunlesi, GIP CEO.
The firm also creating a new International Business structure that will unify its leadership across Europe, Middle East, India and Asia Pacific. More

Augmented reality (AR) technology allows digital images to be imposed over the real world.
Chinese augmented reality glasses and software company Rokid this week announced it raised 500 million yuan ($70 million) in a funding round led by the government of Hefei city.
Rokid sells AR glasses for consumers. But its deal with Hefei will focus on using AR for factories, Rokid founder and CEO Misa Zhu told CNBC in a phone interview Wednesday.

Chinese AR glasses and software company Rokid announced it raised $70 million in a funding round led by the government of Hefei city. Seen here, a demonstration for the company’s augmented reality helmet.
Philip Fong | Afp | Getty Images

BEIJING — Chinese augmented reality glasses and software company Rokid this week announced it raised 500 million yuan ($70 million) in a funding round led by the government of Hefei city.
Hefei, which has also backed electric car startup Nio, is a hub for autos and semiconductor manufacturing near Shanghai.

Augmented reality (AR) technology allows digital images to be imposed over the real world. Apple’s Vision Pro virtual reality headset, set for release on Feb. 2, also allows users to see the real world using what the company calls “spatial computing” technology.
Rokid sells AR glasses for consumers. But its deal with Hefei will focus on using AR for factories, Rokid founder and CEO Misa Zhu told CNBC in a phone interview Wednesday.
AR glasses can help with equipment safety checks, while reducing the time workers need to spend on training, he said, claiming Rokid already has more than 60% market share in industries such as energy in China.

Zhu said that since businesses care more about the product’s capabilities than the price, it allows Rokid to test new AR technology with industrial customers before finding ways to lower its cost and roll it out to consumers.
Rokid’s cooperation agreement with Hefei city will establish an “industrial metaverse headquarters, an ecosystem center and a research and development center,” local state media said in Chinese, translated by CNBC.

While companies have diversified their supply chains away from China due to geopolitics and labor costs, Beijing has said it wants to build up domestic capabilities in advanced manufacturing.

Read more about China from CNBC Pro

Rokid said it plans to make more tech announcements in the coming weeks. The company also expects significant potential from the incorporation of artificial intelligence.
“AI plus AR is going to changes people’s lives in the next five to 10 years,” Zhu told CNBC in Mandarin. “AI will help you to better gather and organize data, and [AR] can be used to display it more naturally.” More