Citigroup cutting 11,000 jobs, taking $1 billion in charges

Wed Dec 5, 2012 6:10pm EST
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By David Henry and Rick Rothacker

(Reuters) - Citigroup Inc said it is cutting 11,000 jobs worldwide, delivering the first of what investors expect to be a new series of steps to shrink the bank down to a more manageable and profitable size.

The cuts, which amount to about 4 percent of the bank's workforce, carry the fingerprints of Citigroup's Chairman Michael O'Neill. A banking industry veteran, O'Neill, 66, has a history of ruthlessly shedding businesses that are not earning enough money.

Investors were expecting O'Neill to launch a similar plan at Citigroup after he pushed out Vikram Pandit and made Michael Corbat chief executive in October.

Speaking at a conference, Citigroup Chief Financial Officer John Gerspach said the cuts announced on Wednesday are "a fairly comprehensive initial foray" for the new leaders, leaving the door open to more reorganization.

Citigroup has been cutting costs since at least 2007, but investors have complained that expenses are not dropping fast enough. Its quarterly operating expenses are similar to their levels in 2006, but quarterly income is now less than half 2006 levels.

The bank announced 96,500 job cuts from 2007 to 2011, behind only the U.S. government and General Motors for layoff announcements, according to outplacement firm Challenger, Gray & Christmas Inc, which tracks U.S. layoffs.

The cuts announced on Wednesday are expected to bring at least $1.1 billion in annual savings starting in 2014, thanks to both job cuts and broader reorganization efforts. The changes the bank is envisioning will also result in revenue falling by about $300 million annually, and will spur some $1.1 billion of charges through the middle of next year.

Earlier reductions, including a 2008 announcement to cut 50,000 jobs, were linked primarily to purging the company of assets that had turned bad in the financial crisis.   Continued...

A man walks past a Citibank branch in lower Manhattan, New York October 16, 2012. REUTERS/Carlo Allegri