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NEW YORK: Citigroup said on Wednesday that it will cut 11,000
jobs, a bold early move by new CEO Michael Corbat. The cuts amount to about 4%
of Citi's workforce of 262,000.
The bank did not spell out how many of the jobs will be in the
United States. Most of them, about 6,200, will come from Citi's consumer
banking unit, which handles everyday functions like branches and checking
accounts.
Citi said that it will sell or scale back consumer operations in
Pakistan, Paraguay, Romania, Turkey and Uruguay and focus on 150 cities around
the world "that have the highest growth potential in consumer banking.''
About 1,900 jobs will come from the institutional clients group,
which includes investment banking. The company will also cut jobs in technology
and operations by using more automation and moving jobs to "lower-cost
locations.''
Citi said it expects the cuts to save $900 million next year, and
slightly more in the following years. They will be a drag in the short term.
Citi said it expects to record pre-tax charges of approximately $1 billion in
the fourth quarter.
Job cuts are familiar in banking today as companies struggle under
new regulations and deal with nervous customers and ire from both lawmakers and
customers miffed about industry sins that helped cause the 2008 financial
crisis.
In a statement, Corbat said the bank remains committed to
"our unparalleled global network and footprint.'' However, he added:
"We have identified areas and products where our scale does not provide
for meaningful returns.''
He promised that the bank would reduce "excess capacity and
expenses, whether they center on technology, real estate or simplifying our
operations.''
Corbat became CEO in October after his predecessor, Vikram Pandit,
stepped down. Pandit had reportedly clashed with the board over the company's
strategy and its relationship with the government.
While the job cuts are among the first major moves by Corbat, they
are in line with Pandit's blueprint.
Citi nearly collapsed during the financial crisis and had to take
two taxpayer bailout loans. It has been shrinking ever since, shedding units
and trying to find a business model that's more streamlined and efficient.
The paring hasn't always gone as well as Citi hoped. This fall,
for example, when Citi negotiated the sale of its stake in the retail brokerage
Morgan Stanley Smith Barney, it got far less than it wanted from the buyer,
Morgan Stanley.
Corbat said Citi "has come a long way over the past several
years.'
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