Citi revealed this week that it would cut 11,000 jobs across the bank and shrink its presence in certain markets in an effort to save $1.1 billion annually by 2014.
The bank will take pre-tax charges of about $1 billion in the fourth quarter and an additional $100 million in the first half of 2013 to carry out the repositioning.
About 35% of the announced fourth-quarter repositioning charges are expected in the Institutional Clients Group (ICG), which houses the Securities & Banking (which will incur 25% of the cuts) and Transaction Services (10%) divisions. The latter division is made up of Securities and Fund Services (SFS) and Treasury & Trade Solutions. According to the bank, 1,900 jobs will be cut from ICG.
A Citi spokesperson told Global Custodian: The job cuts that will apply to Citi Transaction Services will be made proportionally across all the business lines. However, we do not expect them to be material to the functioning of the SFS business.
An additional 6,200 jobs, representing 35% of the charges, will be cut from the Global Consumer Banking business. The restructuring also includes plans either to sell or significantly scale back operations Pakistan, Paraguay, Romania, Turkey and Uruguay and close bank branches in Brazil (14 branches), Hong Kong (7), Hungary (4), Korea (15) and the United States (44).
Citi Holdings will eliminate 350 positions, representing 5% of the fourth-quarter charges, while 25% of the charges will be incurred by corporate and other divisions. In the Operations & Technology group, 2,300 jobs will be cut, plus an additional 300 global functions.
These actions are logical next steps in Citi’s transformation, said Citi CEO Michael Corbat in a statement. 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.”
Citi expects to save $900 million in 2013 as a result of the changes and $1.1 billion annually by 2014. It expects the changes will result in revenue loss of less than $300 million per year.
(CG)