Citigroup Inc. said it will eliminate 20,000 roles in a move that will save it as much as US$2.5 billion as part of chief executive officer Jane Fraser’s quest to boost the Wall Street giant’s lagging returns.

Firmwide expenses are expected to drop to a range of $51 billion to $53 billion over the medium-term, Citigroup said, without clarifying the exact timeframe. In the meantime, though, the firm expects to incur as much as $1 billion in expenses tied to severance payments and Fraser’s broader overhaul of the bank. 

Costs for the year should be in the range of $53.5 billion to $53.8 billion — a decrease from the $56.4 billion the firm spent in 2023. 

The outlook for cost savings helped mask a disappointing fourth quarter, when Citigroup’s fixed-income traders turned in their worst performance in five years as the rates and currencies business was stung by a slump in client activity in the final weeks of the year. Revenue from the business slumped 25 per cent to $2.6 billion.

“The fourth quarter was very disappointing,” Fraser said in the statement. “Given how far we are down the path of our simplification and divestitures, 2024 will be a turning point.”

Fraser in September initiated the biggest restructuring of Citigroup in decades as she seeks to improve the bank’s returns. She has said the moves will allow the bank to eliminate bureaucracy, slimming it down from 13 management layers to just eight. 

Fraser has also said the overhaul would help her boost a key measure of profitability known as return on tangible common equity to at least 11 per cent by 2027 at the latest. She reiterated that medium-term guidance on Friday. 

The 20,000 roles that Citigroup will eliminate include jobs cut as part of the restructuring as well as dismissals that would have occurred anyway.

Citigroup’s quarterly results swung to a $1.8 billion loss, or $1.16 a share. That included a number of one-time items, including a $780 million charge tied to the severance the bank offered to employees impacted by the restructuring. The company also recorded a $1.7 billion charge to operating expenses in the quarter to cover a special assessment to replenish the Federal Deposit Insurance Corp.’s coffers after a series of bank collapses last year.