Citigroup to eliminate 11,000 jobs
By Hibah Yousuf
NEW YORK (CNNMoney) — Citigroup announced it will cut 11,000 jobs as part of plan to trim costs, the first major initiative from the bank’s new CEO, Michael Corbat.
The bank will also take a $1 billion pre-tax charge during the fourth quarter, and approximately $100 million in related charges during the first half of 2013 as part of the plan, which is expected to save $900 million in 2013 and more than $1.1 billion annually beginning in 2014.
“These actions are logical next steps in Citi’s transformation,” said Corbat, who took the helm after former CEO Vikram Pandit stunned investors when he announced his immediate departure in mid-October. “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.”
The bank’s streamlining plans will impact about 1,900 jobs in the institutional clients group, which includes investment banking and trading, and 6,200 positions in the global consumer banking division, which includes scaling back operations in Pakistan, Paraguay, Romania, Turkey and Uruguay. Citi said it will also close 84 bank branches in Brazil, Hong Kong, Hungary, Korea and the United States. That works out to 2% of its branches worldwide.
The bank will also eliminate 350 positions from Citi Holdings, while the remaining jobs reductions will be in the company’s operations and technology division and global positions.
The total reductions impact about 4% of Citigroup’s workforce, which stood at 261,000 full-time employees at the end of September.
As the bank slims its staff, Citigroup also plans to slash bonuses between 5% and 10%, a source with knowledge of the firm’s year-end compensation plans told CNNMoney last week.
Details about the job cuts and bonuses are expected to emerge later Wednesday when Citigroup CFO John Gerspach speaks at a Goldman Sachs financial services conference.
But other bankers noted that downsizing on Wall Street is likely to continue.
Greg Fleming, the president of Morgan Stanley’s wealth management division said Citi’s layoffs are consistent with the general trend in the financial services industry for the past several years. He pointed out that Morgan Stanley has also been repositioning and resizing.
“We’ve been building our wealth management and asset management division to become more balanced,” Fleming said at the Bloomberg Hedge Funds Summit event in New York. “I think that’s ongoing for everybody in the industry.”
Morgan Stanley is in the middle of cutting roughly 4,000 jobs, or 7% of its staff. Those plans were first disclosed in July.
Shares of Citigroup climbed 4% in morning trading. Other bank stocks, including Bank of America, Goldman Sachs, Morgan Stanley were also up sharply.
–CNNMoney’s Maureen Farrell contributed to this report.