Financial services giant Citigroup Inc. (C: Quote), Wednesday revealed it will cut over 11,000 jobs, or about 4 percent of its total workforce, to achieve savings of more than $1.1 billion starting from 2014.
This is the first major move under Citi's new Chief Executive Michael Corbat, who took over the reins of the bank from Vikram Pandit in October. Corbat anticipates the job reduction to curb expenses and increase efficiency across the company.
Citi expects to record charges of about $1 billion in the fourth quarter and about $100 million in the first half next year. Citi currently anticipate expense savings of $900 million in 2013 and annual expense savings of more than $1.1 billion annually from 2014.
"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," said Corbat.
"We will further increase our operating efficiency by reducing excess capacity and expenses, whether they center on technology, real estate or simplifying our operations," Corbat added.
Citi also anticipates the restructuring to negatively impact annual revenues by "less than $300 million."
About 35 percent of the fourth-quarter repositioning charges will be incurred at the global consumer banking division, where 6,200 positions would be made redundant. Citi also plans to either sell or significantly scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay.
According to its ongoing strategy to focus on the 150 cities with highest growth potential, Citi plans to reduce 84 branches, more than half of which will be from the US. After the reorganization, Citi will have more than 4,000 branches around the world.
Meanwhile, about 25 percent of the announced fourth-quarter repositioning charges are expected in securities & banking with another 10 percent in transaction services. About 1,900 positions are expected to be laid off from the units, of which more than half are in the operations & technology functions that support the business.
Citi Holdings unit expects to eliminate about 350 positions and incur about 5 percent of charges, while the remaining 25 percent are expected to be incurred in Corporate and other.
C is currently trading at $35.73, up $1.44 or 4.21%, on a volume of 28.8 million shares, on the NYSE.
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by RTT Staff Writer
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