U.S. banking giant Citigroup says it expects to cut about 11,000 jobs and take a USUS$1 billion fourth quarter restructuring charge.
The bank said Wednesday that it will undertake “a series of repositioning actions” that will reduce expenses and improve efficiency across the company. As a result, it expects to record pre-tax charges of approximately US$1 billion in the fourth quarter of 2012, and approximately US$100 million of related charges in the first half of 2013. These actions will also result in a reduction of more than 11,000 positions, it says.
The global consumer banking division is to take the largest share of the changes, with approximately 35% of the fourth quarter repositioning charges incurred in that business. It is to see a reduction of approximately 6,200 positions, of which approximately 40% are in the operations & technology functions, the bank says.
Citi expects to either sell or significantly scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay. It will also focus on the 150 cities that it says have the highest growth potential in consumer banking. The markets affected by the reductions include Brazil (14 branches), Hong Kong (seven), Hungary (four), Korea (15), and the United States (44).
The bank’s institutional clients group will also take approximately 35% of the charges, 25% in securities & banking, and another 10% in transaction services. The repositioning actions are expected to result in a reduction of approximately 1,900 positions there too, with more than half are in support functions. “The actions are designed to streamline our client coverage model in banking and improve overall productivity in our markets business, especially in areas experiencing continued low profitability such as cash equities,” it says.
Additionally, Citi Holdings is expected to eliminate approximately 350 positions and incur approximately 5% of the repositioning charges, mostly due to branch rationalization in Greece and Spain.
And, its corporate/other division will take the remaining 25% of charges, including the reduction of approximately 2,300 positions that support corporate services, real estate, and Citi Holdings.
Citi currently expects that the repositioning will generate US$900 million of expense savings in 2013, and that the annual expense savings will exceed US$1.1 billion annually beginning in 2014. It also expects a negative impact on annual revenues of less than US$300 million.
“These actions are logical next steps in Citi’s transformation,” said Michael Corbat, Citi’s chief executive officer. “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 center on technology, real estate or simplifying our operations.”