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Last updated: December 5, 2012 7:48 pm
Citigroup’s new chief executive has wasted little time putting his stamp on the US bank by axing 11,000 jobs, adding to a wave of staff reductions across the financial services industry.
Michael Corbat, who took the helm less than two months ago and is known for his focus on costs, announced reductions in the bank’s emerging markets consumer business, global retail operations, investment bank and support functions.
Its consumer banking operations will bear the brunt of the cuts in what one Citi banker described as “taking low-hanging fruit”, given its lack of scale in the five markets – from Turkey to Uruguay – where it will either sell or shrink those units.
“Given the challenging environment, we need to continue to be disciplined in how we allocate our finite resources,” Mr Corbat said in a memo to staff.
The job cuts add to a rapid shrinkage of the Wall Street bank in the past few years after it was hit hard by the financial crisis and had to be bailed out.
Its headcount has dropped by 113,000 since 2007 as it has sold regional businesses and made people redundant.
The new cuts of 4 per cent of the 262,000 staff employed at the end of September were welcomed by investors on Wednesday: Citi’s shares rose more than 6 per cent.
The staff reduction comes on top of the loss of several hundred thousand jobs across the sector since the collapse of Lehman Brothers four years ago, as banks try to cope with higher capital requirements, lower revenues and increasing technology costs.
Mr Corbat’s announcement came almost exactly one year after Vikram Pandit, his predecessor who was ousted in October, said he would slash 4,500 jobs.
Mr Corbat’s speedy move allows the bank to book the bulk of the $1.1bn restructuring costs in his first quarter in the job, paving the way for an almost clean start next year.
The restructuring is aimed at reducing annual costs by more than $1.1bn from 2014 onwards.
Analysts were surprised that the move came even before Mr Corbat had finalised an expected management reshuffle.
The Citi stalwart is planning to announce his core management team as well as a permanent successor in his previous role as head of Europe, the Middle East and Africa in early January, people close to the situation said.
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