Citigroup's new chief cuts 11,000 jobs as 'logical next step'
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Wednesday 05 December 2012
Citigroup, fresh from a boardroom tussle that led to Vikram Pandit's ousting from the chief executive's chair, announced 11,000 redundancies today, a move that will cost the financial behemoth more than $1bn (£620m).
Its shares ticked upwards as it released news of 1,900 lay-offs in its institutional clients' business, 6,200 in its consumer banking arm and 2,300 in its back office. Other divisions are also expected to see cuts as the bank pares down its staffing numbers.
The cuts – presented as a "repositioning" – will land Citi with a bill which it will absorb as a charge of $1bn in the fourth quarter of 2012 and $100m in the first quarter of 2013. It expects to save more than that amount as a result of the cuts by 2014.
Michael Corbat, who replaced Mr Pandit in October, said the cuts were part of the series of actions taken in recent years to make the business leaner as it attempts to heal the wounds endured during the financial crisis by shedding non-core functions. "These actions are logical next steps in Citi's transformation," he said.
"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 centre on technology, real estate or simplifying our operations."
The business, Mr Corbat added, had "come a long way over the past several years".
News of the cuts refocused attention on the influence of Citi's chairman, Michael O'Neill, widely seen as a key mover in Mr Pandit's abrupt departure and Mr Corbat's instalment at the top of one of the world's largest financial businesses.
He is known as a ruthless cost-cutter, and in the past turned around the Bank of Hawaii, partly by maintaining a stringent focus on costs and its core businesses.
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