8 per cent of the bank's 327,000-person workforce will be affected by the restructuring as additional 9,500 jobs will move to lower-cost locations, too. The company wide cuts primarily affect middle- and back-office operations, rather than client-facing staff. Layers of management and some corporate offices will be eliminated.
According to recent press reports, Citigroup has been relocating staff from expensive New York offices elsewhere where costs are lower as part of its cost review.
According to Citigroup (NYSE: C), a New York-based financial services company, the plan is part of a structural expense review conducted over the past three months in every line of business. The plan is expected to generate total expense savings of $2.1 billion in 2007, $3.7 billion in 2008 and $4.6 billion in 2009. Citigroup previously announced information technology savings, too.
The financial powerhouse and its chief executive Charles Prince have come under heavy pressure from leading shareholders and investors in recent months to slash Citigroup's expenses.
Operating expenses soared 15 per cent in 2006 to $52 billion, while revenue rose 7 per cent. Citigroup's largest individual shareholder, Saudi Prince Alwaleed bin Talal, called on the bank to make "draconian" cuts.
Since Citicorp and Travelers Group merged in 1998 to form Citigroup, this is the first companywide restructuring.
The bank is also facing strong competition from rival Bank of America which has expanded aggressively in recent years.
The planned cuts follow an expense review begun in December by Chief Operating Officer Robert Druskin. “A lot of the initiatives undertaken in the name of expense reduction also are designed to unclog our corporate system. We want to make Citigroup a more nimble, entrepreneurial place. We want decision-making to be quicker. We want things to move through the pipelines faster,” he said.
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