Citi seems to be cutting more expensive people as data transformation remains a sticking point

Like Goldman Sachs, Citi ended the first quarter with fewer people than it began. The bank said today that 2,000 people disappeared during the quarter. They seem to have been paid relatively handsomely to go on their way.

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The chart below, taken from Citi's investor presentation, shows the bank's headcount changes each quarter, and its quarterly severance payments. Headcount changes are net and may not exactly map the number of people cut, but using them as a proxy for layoffs it appears that Citi might be removing people higher up the pay scale.

In the first quarter of 2026, for example, Citi's headcount fell by 2,000 people. This is double the 1,000 people the bank was said to be cutting back in January. Citi spent $500m on severance in the quarter, implying $250k each for the 2,000 people who went on.

Using this methodology, Citi's first quarter severance payments look historically generous. In the third quarter of 2025, the bank only seems to have paid $67k each to its departing staff; in the fourth it seems to have paid them $100k.

Presuming net headcount figures are indeed an accurate proxy for job cuts, Citi therefore seems to have decided to be kind to its inadvertent leavers. Howeverm severance payments are not a reflection of benevolence but of salaries. And so, Citi seems to have been cutting more expensive people in Q1.

The bank declined to comment on this hypothesis. 

Citi is likely cutting a particular type of person. The bank added tens of thousands of staff in recent years as it worked on a consent order issued by regulators in 2020. This consent order stated that Citi had "failed to implement and maintain an enterprise- wide risk management and compliance risk management program, internal controls, or a data governance program commensurate with the bank’s size, complexity, and risk profile." 

Following the consent order, Citi's headcount went from 200,000 people in 2019 to nearly 240,000 people in 2022 as it added data, compliance and regulatory staff. Recently departing Citi CFO Mark Mason said in 2024 that the bank was spending $250m on remediation, including new data professionals.  In July 2024, Citi was issued a further $136m regulatory fine for data issues in its commercial loan files. 

Citi's headcount has since shrunk back again. Reuters reported in February that Citi is aiming to complete work on its consent orders this year. At the end of March, the bank employed 224,000 people and as the consent order comes to an end, more people are likely to leave.

Citi said today that it's 90% of the way through the transformation program born of its consent order. However, CEO Jane Fraser also said that the remaining 10% of its issues are related to data and specifically related to "data use in regulatory reporting" where Citi's "target state" has not been reached. Even in 2024, Mark Mason said the bank was prioritising the transformation of data in its 30 critical regulatory reports, but that one such report alone had 750,000 lines of code.

There have been various comings and goings in Citi's data team as it gets to grips with the scale of this challenge. That team is now led by Tim Ryan, a former partner from PWC who was hired in June 2024 and promoted in September 2024. 

The remaining 10% of regulatory data issues not withstanding, things seem to be going well. Citi CEO Jane Fraser said that the transformation has left Citi in a good place. The bank now has a single repository for data in the institutional area of the bank, for example, and Fraser said this leaves it well placed to make the most of AI.  By comparison, Citi's wealth management business was still said to be heavily dependent on spreadsheets as recently as June 2024.

Citi has an investor day on May 7 and more will be revealed then. Gonzalo Luchetti, Citi's new and "energised" CFO said today that the bank expects headcount to come down throughout this year. Fraser added that the bank is focused on achieving "structural efficiencies over time.” She said the bank will use AI and automation and these efficiencies to "supercharge investments in a self-funded way."  

This could be taken to imply that as AI reduces headcount, Citi will have more money to invest in more AI. Algorithms don't need severance.

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