Banking giant Citi on Friday reported a net loss of $1.8 billion for the fourth quarter of 2023 as compared to a year ago profit of $2.5 billion. The bank also said that it plans to reduce its headcount in the future. The revenue for the quarter of Citi’s wealth segment, which contains its crypto arm saw a decline of 3% to $1.7 billion.
Citi swings to losses in Q4, Crypto division’s revenue dips
Citi reported a loss of $1.8 billion for the final quarter of 2023. The banks’ quarterly revenue came in at $17.4 billion, a 3% plunge from a year ago. Citi attributes its loss to higher expenses and higher cost of credits incurred in the period.
The wealth segment of the bank also saw a 3% decline in revenue for the quarter to $1.7 billion. Citi’s wealth branch houses its’ digital asset branch. The drop in the segment’s revenue came on the back of lower deposit spreads, the bank said in a statement.
Citi to cut jobs in the medium term
The American multinational investment bank and financial services corporation also plans to reduce its workforce in the medium term as a part of the corporation’s restructuring program. The job cuts will likely impact around 20,000 people, the bank added.
Citi’s job cuts also come at a time when finical sectors across the world are opting for headcount reduction. Recently, investment banking behemoth BlackRock Inc. also announced that it will lay off 3% of its workers.
Crypto investors side opposite to banking institutions
Virtual currency investors usually have a preference for using crypto platforms over traditional banking institutions. This has likely caused a widening relationship between crypto firms and traditional banks. For example, the largest cryptocurrency exchange in the world, Binance, had announced that it would temporarily halt deposits and withdrawals of US dollars using bank accounts.
In general, banks are apprehensive to deal with digital assets, particularly in the absence of consistent rules overseeing the emerging sector. Banks’ primary concern is to stay in the financial system. However, if they believe they may be excluded for taking excessive risks, they won’t take them in the first place.
However, crypto firms are susceptible to working in an unregulated environment, giving them an edge in luring clients who are interested to invest in digital assets. Banks on the other hand, feel that the advantages of cryptocurrency trading outweigh the rising threats to business and regulations.
Citi had forayed into digital tokens to cater to institutional clients back in October of 2023. But, despite all guarantees and promises, investors still seem to be attracted towards crypto firms over banks for trading virtual currencies.
The evident banking crisis: fall of SVB and Silvergate
The banking crisis in the world have been much evident for the past two years. One after the other, banks have shut down or have been facing some sort of financial crunch. One such shocker to the crypto markets was the fall of Silvergate bank. The crypto-friendly bank collapsed after reporting a loss of $8.1 billion in the January of 2023. On March 8, 2023, it was announced that Silvergate Bank would wind down its operations and liquidate.
Shacking the foundations of financial markets again was the Silicon Valley Bank Crisis. In March 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (SVB) due to a number of reasons, including a significant decline in the value of its investments and a significant withdrawal of funds by depositors.
Citi’s today’s results only worsen the idea that financial sectors are undergoing a tough time.
