Citigroup C today announced a series of repositioning actions that will further
reduce expenses and improve efficiency across the company while maintaining
Citi's unique capabilities to serve clients, especially in the emerging
markets. These actions will result in increased business efficiency,
streamlined operations and an optimized consumer footprint across geographies.
Michael Corbat, Citi's Chief Executive Officer, said, “These actions are
logical next steps in Citi's transformation. 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 center on
technology, real estate or simplifying our operations.”
Due to this repositioning, Citi expects to record pre-tax charges of
approximately $1 billion in the fourth quarter of 2012 and approximately $100
million of related charges in the first half of 2013. Citi currently expects
that the repositioning will generate $900 million of expense savings
benefitting 2013 results and that the annual expense savings will exceed $1.1
billion annually beginning in 2014. Citi also expects the repositioning
actions to have a negative impact on annual revenues of less than $300
million. These actions will result in a reduction of more than 11,000
positions.
Citi expects the repositioning activity to affect the following businesses and
functions:
Institutional Clients Group (ICG): Approximately 25% of the announced fourth
quarter repositioning charges are expected in Securities & Banking with
another 10% in Transaction Services. The repositioning actions are expected to
result in a reduction of approximately 1,900 positions, of which more than
half are in the Operations & Technology functions that support the business.
The actions are designed to streamline our client coverage model in Banking
and improve overall productivity in our Markets business, especially in areas
experiencing continued low profitability such as cash equities.
Global Consumer Banking (GCB): Approximately 35% of the fourth quarter
repositioning charges are expected to be incurred in Global Consumer Banking,
resulting in a reduction of approximately 6,200 positions, of which
approximately 40% are in the Operations & Technology functions that support
the business. As a result of the repositioning actions, Citi expects to either
sell or significantly scale back consumer operations in Pakistan, Paraguay,
Romania, Turkey and Uruguay.
Consistent with Citi's strategy of focusing on the 150 cities that have the
highest growth potential in consumer banking, Citi will optimize its branch
footprint and further concentrate its presence in major metropolitan areas.
The markets affected by the reductions include Brazil (14 branches), Hong Kong
(7), Hungary (4), Korea (15), and the United States (44).
Citi will continue to invest in its franchises in these countries to serve its
targeted consumer segments. After this repositioning, Citi will have more than
4,000 retail branches around the world and all of the aforementioned countries
will continue to be served by our institutional businesses.
Citi Holdings: Citi Holdings is expected to eliminate approximately 350
positions and incur approximately 5% of the repositioning charges. Most of the
repositioning charges are related to branch rationalization in Greece and
Spain.
Corporate/Other: About 25% of the announced repositioning charges are expected
to be incurred in Corporate/Other.
* Operations & Technology: Citi's Operations & Technology function is
expected to achieve greater efficiency through increasing standardization
and the use of automated processes; streamlining the organizational
structure; and consolidating functions and moving certain positions to
lower-cost locations. In addition, there will be a consolidation of
certain locations in Citi's real estate portfolio. In addition to the
reductions in Operations & Technology positions that support the ICG and
GCB businesses, these actions will result in the reduction of
approximately 2,300 positions that support corporate services, real
estate, and Citi Holdings.
* Global Functions: Roughly 300 Global Functions positions will be
eliminated as a result of efficiency savings.
"Citi has come a long way over the past several years. We have been
consistently profitable; our capital strength is among the highest in the
industry; and we have shed hundreds of billions in assets and businesses that
are not core to our strategy. We will continue to seek ways to optimize the
execution of our strategy to better serve our clients and deliver results for
all of our stakeholders," concluded Mr. Corbat.
Citi, the leading global bank, has approximately 200 million customer accounts
and does business in more than 160 countries and jurisdictions. Citi provides
consumers, corporations, governments and institutions with a broad range of
financial products and services, including consumer banking and credit,
corporate and investment banking, securities brokerage, transaction services,
and wealth management.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in