US banking powerhouse Citigroup announced Wednesday it was cutting 17,000 jobs as part of a major global overhaul of its operations aimed at saving several billion US dollars in costs.
Citigroup, one of the world’s biggest financial firms, said more than 26,500 staff would be impacted by its reforms, however, as it also plans to move over 9,500 jobs to “lower-cost locations” in the United States and overseas.
The New York-based banking titan has come under pressure from shareholders to slash its spending and it unveiled the mass job cuts after a three-month review of its operations.
“Ultimately these changes will streamline Citi and make us leaner, more efficient, and better able to take advantage of high revenue opportunities,” said Citigroup chairman and chief executive Charles Prince.
Citigroup, which has expanded aggressively in the last decade, employs some 327,000 staff worldwide and the job losses will affect over five percent of its workforce.
Senior executives said the layoffs are expected to help generate cost savings of 2.1 billion US dollars in 2007, 3.7 billion in 2008, and 4.6 billion in 2009.
Prince and other executives said in a conference call with Wall Street analysts that further reforms could be rolled out in coming months as they vie to tap down costs.
Citigroup’s CEO promised to make cost cuts a top priority after the bank’s fourth quarter profits slowed and following a reported call from leading shareholder, Saudi Prince Alwaleed bin Talal, for “draconian” steps to tackle spending.
Citigroup still booked 5.13 billion US dollars in net profits during the last three months of 2006, more than the combined earnings of Merrill Lynch, Apple and American Airlines.
Wednesday’s announcement will be a blow to thousands of the bank’s middle managers and adminstrative workers who are slated to bear the brunt of the layoffs.
“We wanted to shrink the layers of management,” said chief operating officer Robert Druskin.
Aside from layoffs, Citigroup said it was also moving to close some offices and boost its IT savings to further rein in expenses. Executives said bankers’ day-to-day business expenses are also under the microscope.
Around 57 percent of the slated job cuts will occur outside the United States while some 43 percent of the layoffs will affect US-based staff, but executives gave few other details on where the axe would fall.
The banking giant, with a global footprint spanning the Americas, Europe and Asia, will swallow a hefty pre-tax charge of 1.4 billion US dollars during the first quarter of 2007 to largely meet severance payouts.
About two-thirds of the over 9,500 posts due to be relocated would occur through “attrition.” In many cases, jobs lost in a higher cost region will be replaced by new positions in a lower cost country.
Although a lower headcount is anticipated to boost Citigroup’s fortunes, it will likely not be welcomed by those affected.
The US job market has been strong in recent months, despite a slowing economy, but Citigroup is not the only big company laying off employees.
German-US auto group DaimlerChrysler announced 13,000 layoffs at its troubled Chrysler unit in February while pharmaceutical giant Pfizer Inc., said in January it was laying off 10,000 workers to trim costs.
Citigroup’s shares were down 76 cents at 51.64 US dollars in late morning trading amid wider market losses. AFP