Operations and technology to bear the brunt of brutal Citi rationalisation plan
05 December 2012 | 9207 views | 1
Citigroup is to slash four per cent of its global workforce, eliminating 11,000 jobs in a bid to save more than $1.1 billion in operating expenses.
The drastic cutbacks were announced by incoming CEO Micahel Corbat, who took over from ousted chief Vikram Pandit in October.
Under the plans, Citi's operations & technology function will be streamlined, consolidating functions and moving certain positions to lower-cost locations. Almost 25% of the 11,000 total job cuts will be found in IT positions.
The bank plans to scale back its ambitions in global consumer banking, cutting 6200 positions, of which approximately 40% are in the operations and technology functions that support the business.
Citi expects to either sell or significantly reduce consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay, while focussing on the 150 cities that have the highest growth potential.
Part of the cutbacks will see a reduction in the branch network, with 44 branches eliminated from the US market, and a further 40 from Brazil, Hong Kong, Hungary, and Korea facing the chop. There will also be a significant rationalisation of branches in depressed eurozone markets in Greece and Spain.
In addition, there will be a consolidation of certain locations in Citi's real estate portfolio. These actions will result in the reduction of approximately 2,00 positions that support corporate services, real estate, and Citi Holdings.
Another 1900 jobs will be cut from the Institutional Client Group, of which more than half will come from operations and technology.
Says Corbat: "These actions are logical next steps in Citi's transformation. While we are committed to - and our strategy continues to leverage - our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns. And we will further increase our operating efficiency by reducing excess capacity and expenses, whether they centre on technology, real estate or simplifying our operations."
Citi expects to record pre-tax charges of approximately $1 billion in the fourth quarter of 2012 and approximately $100 million of related charges in the first half of 2013. Citi expects the restructuring will generate $900 million of expense savings and that the annual expense savings will exceed $1.1 billion annually beginning in 2014.