2008 Woodie Awards
Citibank may cut at least 10,000 jobs
Experts speculate five percent workforce reduction is meant to appease Saudi investor
Jim Hanrahan '09
Issue date: 3/29/07 Section: World
- Page 1 of 1
The world's largest bank is planning to fire 15,000 employees. Citigroup will cut its global workforce by five percent to satisfy investors' demands to make the company more efficient and help reduce recent profit losses.
With the cuts, Citigroup hopes to save about $1 billion of its annual cost. The bank is planning to shift its focus to international operations as it realizes India is its biggest driver of growth.
The cuts will fall mostly in the cities of New York, London, and Hong Kong, where operating costs are high and a larger percentage of the company's workforce is located.
Cuts will mostly be in the area of consumer relations. This includes retail banking, credit cards, and consumer finance. Analysts told The Times that consumer relations is a popular area in which to focus on cuts because of the fragmented nature of the department's hierarchy.
Since India has risen from 44 to 60 percent in global revenues for the company, the country will be spared the employee layoff.
Robert Druskin, who was promoted to chief operating officer last December, has been under pressure to improve Citigroup's efficiency. The position was created last year after pressure from investors, most notably Prince Alwaleed bin Talal, the Saudi billionaire. Talal, who is Citigroup's largest single shareholder, made a public call last summer for "draconian" measures to reduce overheads.
In recent years, Citigroup has invested much in newer technology and opening hundreds of new branches. With these advancements, operating expenses have increased by 15 percent, up from the previous seven percent. To further its presence in Asia and Latin America, the bank's international consumer division's costs went up about 18 percent-roughly $11.2 billion.
On April 16, Citigroup is expected to release its findings when it release its quarterly earnings report.
Liz Moyer of Forbes.com noted that five percent reductions are considered the standard for such cost reductions in banking history but also quoted analyst Richard Bove of Punk Ziegel as saying that the steep cost cuts aren't the right solution.
Ziegel told Forbes that Citi has underinvested in technology and branches since the era of its former chief executive Sanford Weill, who cut the bank's expenses after its acquisition by Travelers Group and focused instead on acquisitions.
With the cuts, Citigroup hopes to save about $1 billion of its annual cost. The bank is planning to shift its focus to international operations as it realizes India is its biggest driver of growth.
The cuts will fall mostly in the cities of New York, London, and Hong Kong, where operating costs are high and a larger percentage of the company's workforce is located.
Cuts will mostly be in the area of consumer relations. This includes retail banking, credit cards, and consumer finance. Analysts told The Times that consumer relations is a popular area in which to focus on cuts because of the fragmented nature of the department's hierarchy.
Since India has risen from 44 to 60 percent in global revenues for the company, the country will be spared the employee layoff.
Robert Druskin, who was promoted to chief operating officer last December, has been under pressure to improve Citigroup's efficiency. The position was created last year after pressure from investors, most notably Prince Alwaleed bin Talal, the Saudi billionaire. Talal, who is Citigroup's largest single shareholder, made a public call last summer for "draconian" measures to reduce overheads.
In recent years, Citigroup has invested much in newer technology and opening hundreds of new branches. With these advancements, operating expenses have increased by 15 percent, up from the previous seven percent. To further its presence in Asia and Latin America, the bank's international consumer division's costs went up about 18 percent-roughly $11.2 billion.
On April 16, Citigroup is expected to release its findings when it release its quarterly earnings report.
Liz Moyer of Forbes.com noted that five percent reductions are considered the standard for such cost reductions in banking history but also quoted analyst Richard Bove of Punk Ziegel as saying that the steep cost cuts aren't the right solution.
Ziegel told Forbes that Citi has underinvested in technology and branches since the era of its former chief executive Sanford Weill, who cut the bank's expenses after its acquisition by Travelers Group and focused instead on acquisitions.