12:50 p.m.
NEW YORK (AP) — Citigroup Inc., the nation’s largest financial institution, said today it will eliminate about 17,000 jobs as part of a companywide restructuring to reduce costs and improve profit.
That amounts to about 5 percent of the bank’s 327,000-strong work force. Citigroup said its plans include “shrinking the size of corporate centers,” several of which are in New York. It also expects to move about 9,500 jobs to lower-cost locations.
More jobs will be cut overseas than in the United States, said Robert Druskin, Citi’s chief operating officer, who developed the restructuring plan over the past three months. He said the bank was more likely to rely on layoffs than on attrition to make sure the targeted positions were vacated.
Still, eliminating the jobs won’t reduce the bank’s work force but merely slow its growth, Citi executives said.
Mr. Druskin told Wall Street analysts on a conference call that they should expect Citi’s head count to grow this year because of acquisitions and plans to open new branches, especially overseas.
“But that rate of growth will be at a significantly diminished rate,” Mr. Druskin said.
Citigroup has a number of acquisitions in the works. It is expanding operations in China and earlier this month announced the purchase of a bank in Taiwan. Citi also has made a tender offer for a Japanese brokerage.
In early trading, the bank’s shares were down 54 cents, at $51.86 on the New York Stock Exchange.
The bank said that with previously announced information technology savings, the overhaul will save the New York bank about $2.1 billion in 2007, $3.7 billion in 2008 and $4.6 billion in 2009.
Citigroup executives have been under pressure from investors and analysts to get a handle on the bank’s burgeoning expenses, which grew 15 percent last year, twice the pace of revenue growth. As a result, its shares have lagged those of other big money-center banks.
Citigroup said it will record a pretax charge of $1.38 billion in the first quarter of 2007 and additional charges totaling about $200 million pretax over the subsequent quarters of 2007. The bank reports its first-quarter earnings next week.
Charles Prince, the bank’s chairman and chief executive officer, said implementation of Mr. Druskin’s recommendations “will improve business integration as well as our ability to move quickly and seize new growth opportunities.”
He also emphasized that more expense cutbacks were possible, saying Citi was adopting “a continuous approach to improving our efficiency — this is not a one-time effort.”
Among the anticipated changes are:
Elimination of layers of management, in some cases increasing the average number of employees who report to each manager.
Staff reductions will include some at corporate headquarters.
Expanding centralized procurement and requiring more sharing of resources, such as legal and human resources teams.
Consolidation of some back-office, middle-office and corporate functions to eliminate duplication.
“More than 9,500 jobs will be moved to lower-cost locations, both domestically and internationally, with about two-thirds through attrition,” the report said.
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