Citigroup (NYSE:C) has decided to cut 11,000 jobs, or 4 percent of its work force, to try and bring down operational costs by as much as $1.1 billion a year. The steps will initially result in pre-tax charges of $1 billion to fourth-quarter earnings, the company said in a statement.
What Cost-cutting Measures is Citi Taking?
As part of the plan, 1,900 jobs will be cut from in the institutional clients division, another 6,200 positions will be taken away from the consumer banking business, and 2,600 jobs will be removed from the operations and technology group. The cuts are intended to ‘‘improve overall productivity in our markets business, especially in areas experiencing continued low profitability, such as cash equities,’’ the statement said. The reorganization will reduce annual revenues by “less than $300 million.”
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“These actions are logical next steps in Citi’s transformation,” chief executive Michael L. Corbat said. “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. We will further increase our operating efficiency by reducing excess capacity and expenses.”
What Does It Mean for the Company?
Corbat took over after the exit of his predecessor Vikram S. Pandit, whose exit in October was reportedly engineered by group chairman Michael E. O’Neill. Concerns that O’Neill and Corbat, whom the chairman reportedly handpicked, would reduce the size of the bank have persisted in the executive ranks for a while.
Shares of Citi, the third-biggest U.S. bank, rose more than 4 percent, to $35.68, in morning trading after the announcement.
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