Citigroup axes 670 jobs at UK sub-prime units
Tuesday, 20 May 2008
Print
Email
Turbulent markets took a further toll on financial jobs yesterday as Citigroup, the US banking giant, announced the closure of two UK sub-prime businesses, and Ingenious, the media investment company, shut its fledgling stockbroking arm.
Citigroup is shutting its CitiFinancial unsecured loan business and the Future Mortgages division, which employ about 670 people in total. The businesses will stop offering new loans tomorrow. The US bank will shut all CitiFinancial's 49 loan centres, which employ 270 staff, and a 400-strong administration centre in Doxford, Sunderland.
The cuts at Doxford will be a further blow to the financial services industry in the North-east. Northern Rock has already announced it will cut about 2,000 jobs by the end of 2011, with most positions going this year.
Citigroup said it was shutting the sub-prime businesses to concentrate on its more upmarket Egg and Citi businesses. In January, it announced a clearout of 161,000 Egg credit card customers because they had poor credit records. Many of the rejected customers said they always paid their bills on time, raising suspicions that Citi was clearing out unprofitable customers.
There is no union agreement at the axed businesses. Citi said it would consult staff and make them aware of the options open to them.
Bert Pijls, the head of Citi's UK consumer business, said: "Following a strategic review of the consumer business in the UK, Future Mortgages and CitiFinancial were not identified as areas for strategic growth. By proposing to focus resource on our Citi and Egg brands, we are reflecting Citi's global strategy and creating a platform for expansion in the UK personal finance market."
Mr Pijls took over in March after the departure of Ian Kerr, who implemented the decision to cull the customers. Each of the businesses to be closed has less than 1 per cent of the UK market, but their disappearance will reduce the rapidly contracting sub-prime market still further.
Ingenious, founded by the entertainment entrepreneur Patrick McKenna, is shutting its broking arm less than two years after launch. It was meant to offer research and advice on media and technology stocks. The business, which employs 15 people, was headed by Bob Benton, the former executive chairman of Bridgewell, the stockbroker. The company said it would keep redundancies to a minimum.
