NEW YORK, N.Y. – Citigroup said Wednesday that it will cut 11,000 jobs, a bold early move by new CEO Michael Corbat. The cuts amount to about 4 per cent of Citi’s workforce of 262,000.
The bank did not spell out how many of the jobs will be in the United States. Most of them, about 6,200, will come from Citi’s consumer banking unit, which handles everyday functions like branches and checking accounts.
Citi said that it will sell or scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay and focus on 150 cities around the world “that have the highest growth potential in consumer banking.”
About 1,900 jobs will come from the institutional clients group, which includes investment banking. The company will also cut jobs in technology and operations by using more automation and moving jobs to “lower-cost locations.”
Citi said it expects the cuts to save $900 million next year, and slightly more in the following years. They will be a drag in the short term. Citi said it expects to record pre-tax charges of approximately $1 billion in the fourth quarter.
Job cuts are familiar in banking today as companies struggle under new regulations and deal with nervous customers and ire from both lawmakers and customers miffed about industry sins that helped cause the 2008 financial crisis.
In a statement, Corbat said the bank remains committed to “our unparalleled global network and footprint.” However, he added: “We have identified areas and products where our scale does not provide for meaningful returns.”
He promised that the bank would reduce “excess capacity and expenses, whether they centre on technology, real estate or simplifying our operations.”
Corbat became CEO in October after his predecessor, Vikram Pandit, stepped down. Pandit had reportedly clashed with the board over the company’s strategy and its relationship with the government.
While the job cuts are among the first major moves by Corbat, they are in line with Pandit’s blueprint.
Citi nearly collapsed during the financial crisis and had to take two taxpayer bailout loans. It has been shrinking ever since, shedding units and trying to find a business model that’s more streamlined and efficient.
The paring hasn’t always gone as well as Citi hoped. This fall, for example, when Citi negotiated the sale of its stake in the retail brokerage Morgan Stanley Smith Barney, it got far less than it wanted from the buyer, Morgan Stanley.
Corbat said Citi “has come a long way over the past several years.”