Did Citi’s FX traders destroy the bonus pool?

The 12th of January has been a bit of a Superday for bank results, with JPMorgan, BofA, and Wells Fargo all reporting, that doesn’t mean everyone’s done well.

That includes Citi. As CEO Jane Fraser said, the fourth quarter was “very disappointing” for the bank, despite some “substantial” progress that was made in the bank’s well-known restructuring plan, nicknamed internally “Project Bora Bora”.


What was so disappointing? Fixed income, currencies, and commodities (FICC) trading revenues – mostly. Citi saw a 25% decline in revenue in Q4 of 2023, compared to a more modest 6% decline at Bank of America and a 6% rise at JPMorgan. For the year as whole, Citi’s FICC revenues were 6% down in 2023 compared to 2022, in contrast to JPMorgan and BofA’s 7% and 12% rises. That’s ugly.

Most of the fall came from macro trading and it all happened in the fourth quarter. Citi’s macro traders did well in the first nine months of the year. Citi reported at the end of Q3 2023 that its rates & currencies traders were up 4% in the first nine months compared to the previous year. They ended the year down 6%. Spread products, meanwhile, managed to save their year slightly: from 11% down in the first nine months to just 5% down at the end of the year.

Citi blamed its fourth quarter fixed income trading issue on lower volatility, a “significant” slowdown in December and – most significantly it would seem – the impact of the devaluation of the Argentinian peso. The latter was part of Argentinian President Javier Milei’s “shock therapy.” We were first to report the issue on Wednesday.  

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Other than FICC, Citi’s results were also mixed. Equities trading revenues were well up on the quarter (by 9%), but down on the year (by 9%). BofA and JPMorgan reported similar results quarterly, but were flat on the year. M&A was also down by nearly a quarter year-on-year. The only Citi silver lining, sort of, was debt capital markets revenue, which were up 9% on the year.

To top off a miserable holiday season, Citi announced pretty substantial job cuts – 20,000 people in total, or around 10% of its existing numbers – in the “medium-term”. It’s already earmarked $700m – $1bn in “severance and cost related to organizational simplification” for 2024 to that end, on top of the $900m already spent on 7,000 redundancies (and the restructuring) in the last quarter of 2023.

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