Citigroup Inc. announces plans to cut 20,000 jobs, saving up to $2.5 billion in an effort to boost the lagging profits of the Wall Street giant. CEO Jane Fraser aims to reduce the company's total costs to a range of $51 billion to $53 billion in the medium term, according to Citigroup.

Meanwhile, the company expects expenses of up to $1 billion for severance payments and Fraser's comprehensive restructuring of the bank. The prospect of cost savings helped to conceal a disappointing fourth-quarter result, in which Citigroup's fixed-income trading business delivered its worst performance in five years.

The revenue from the business decreased by 25% to $2.6 billion.

"The fourth quarter was very disappointing," said Fraser in the statement. "Considering the fact that we are on track to drive our simplification and our sales, 2024 will be a turning point." The stocks rose by less than 1% in New York, after falling 1.8% on Thursday, after the bank reported billions in one-time charges from its restructuring and exposure to issues in Argentina and Russia.

Fraser initiates Citigroup's largest restructuring in decades in September to improve the bank's profitability. She stated that the measures will allow the bank to reduce bureaucracy by reducing management levels from 13 to just eight. Fraser also said that the restructuring will help her increase an important profitability metric, referred to as return on tangible equity, to at least 11% by 2027 at the latest.

She repeated this medium-term forecast on Friday.

As it has tried to increase profitability, Citigroup has decided to close its municipal bond business and its high-yield securities trading department, just as competitor JPMorgan Chase & Co. continues to invest in the latter area. The bank is willing to divest from more business segments in its market division if they "do not fit into the strategy for the future," said Chief Financial Officer Mark Mason in a conference call with journalists.

The department for fixed-income securities faced a series of adversities in the last weeks of the year, said Mason, pointing out that there was very little volatility in currencies and commodities. Ultimately, the total number of employees will decrease by 60,000 to 180,000 in the next six years, said Mason.

This includes the 20,000 positions that will be cut as part of Fraser's comprehensive restructuring, as well as 40,000 employees who will leave when Citigroup lists its private, small business, and medium-sized business segments in Mexico through an IPO.

The results of Citigroup for the fourth quarter revolved around a loss of $1.8 billion or $1.16 per share. This included a series of one-time items, including a charge of $780 million for severance payments offered by the bank to employees affected by the restructuring.

The company also incurred $1.7 billion in operating expenses in the quarter to cover a special levy to restore the funds of the Federal Deposit Insurance Corp. following a series of bank failures last year.

The costs for the upcoming year are expected to range from $53.5 billion to $53.8 billion - a decrease from the $56.4 billion that the company spent in the year 2023.