Citigroup announced that it will slash 11,000 jobs worldwide and take a $1 billion charge in the fourth quarter. Many of the cuts at Citigroup are coming from its global consumer banking business. Citi announced that it will eliminate 6,200 positions and close 84 branches in its worldwide global consumer banking business, including in Brazil, South Korea, and Hungary with 44 closings occurring in the United States. Citi will greatly reduce its footprint in several countries and leave five other countries entirely, including Turkey and Pakistan.
Additionally, 1,900 positions will be eliminated from Citi’s capital markets and transaction processing units and an estimated 2,600 jobs will be eliminated from its back office operations. The job cuts total about 4% of the company’s work force. The layoffs will drop the company’s head count down to about 250,000, nearly 30% less since before the financial crisis in 2007. John Gerspach, the bank’s chief financial officer, described the downsizing as “part of a continuum.”
The changes will result in a charge of nearly $1 billion in the fourth quarter, but are expected to save $900 million next year and $1.1 billion annually starting in 2014. Chief executive Michael L. Corbat said in a statement, “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.” Citi is the nation’s third-biggest bank by assets.
Citi has been trying to bolster returns to counteract mounting pressure from shareholders. This has mainly involved working through a glut of bad loans and systematically dismantling some businesses. The bank has also been facing a continuing battle against high operating costs and persistently sluggish markets. The announcement did not signal a new strategy or direction for the bank. Michael Mayo, an analyst at Crédit Agricole Securities, said, “Ultimately, it misses the point. They need a more radical restructuring.”