Citi shares drop as CEO Fraser plans deeper job cuts this year

Published Wed, Jul 15, 2026 · 11:43 AM

CITIGROUP shares slumped after the bank’s top executives said they plan to bring forward job cuts and key technology investments, moves that could increase costs later this year.

After reporting record earnings that beat expectations in key business lines, chief executive officer Jane Fraser told analysts and investors that the bank was preparing to “lean in with additional investments and other actions.” 

The initially cryptic comments sent the bank’s shares tumbling more than 5 per cent, after an earlier gain following the release of second-quarter results. The bank “bungled” its answer about what those costs would entail, according to veteran bank analyst Mike Mayo at Wells Fargo & Co.

“I think they’re pulling forward future expenses, but that’s part of the uncertainty,” he said. “They just said, ‘We’re going to spend a lot more money than maybe you thought and we’re not telling you what we’re spending it on,’ so that doesn’t sit well with investors. Investors don’t like that type of uncertainty.”

Citi expects to incur more severance expenses in the second half and accelerate investments it set out at its May investor day, CFO Gonzalo Luchetti added, suggesting the firm plans deeper job cuts than previously indicated.

Citi, which saw headcount fall by 5,000 in the past three months to 219,000, has already spent US$800 million on severance costs this year.

The bank will “ramp up investments across the businesses in the second half and incur additional severance as we target future efficiencies,” Luchetti said, while declining to provide more details on possible job cuts. 

The Argentine, who took the top finance job earlier this year, was branded on the call as a possible “Messi of CFOs” by Mayo — a day before the South American nation faces off against England in the Fifa World Cup’s semi-finals.

During the call with analysts, Citi executives faced questions about why they had left their full-year forecast for return on tangible common equity at 10 per cent to 11 per cent, even though that profitability metric has trended higher so far this year. 

Luchetti said the bank’s efficiency ratio — a measure of how much it costs to produce a dollar of revenue — will be about 60 per cent for the year. That’s higher than it was during the first half, indicating expenses are likely to rise as the bank invests more of its revenues rather than returning them to shareholders.

Fraser said she believes the bank can hit its return targets and that its additional investments will provide more sustainable profits for the bank, which has long been a Wall Street laggard.

“It is 100 per cent on the offense,” Fraser said about the plans. “The momentum is behind us, but we’re going to take advantage of opportunities to bring investments forward, and not just manage to short-term numbers. We’re playing the long game here.”

Fraser has revamped the bank, restructuring the organisation and working through consent orders imposed by regulators six years ago.

Bloomberg reported in late March that Citi was exploring buying a retail bank or wealth brokerage. Fraser said on Tuesday it’s only interested in organic investments, not in buying another company. BLOOMBERG