Citigroup set to move or cut 15,000 jobs

Citigroup is expected to cut or move to less expensive locations more than 15,000 jobs as part of a restructuring programme analysts expect will reduce costs by more than $2bn (€1.5bn) a year.

The cuts, due to be unveiled next month, are expected to affect all parts of Citigroup’s business in the US and overseas although the focus will be on back- and middle-office functions.

The review is likely to involve cuts in some of Citigroup’s regional headquarters operations outside the US and some middle management layers within the corporate and investment bank.

Chuck Prince, chief executive, is under intense pressure to curb mounting expenses in an effort to revive Citigroup’s stagnant share price.

Last year, he faced public criticism from Prince Alwaleed bin Talal, owner of a 4.3 per cent stake, who called for “draconian” action to rein in expenses.

In December, he responded by ordering Bob Druskin, newly appointed chief operating officer, to carry out a comprehensive review of the group’s cost base.

The results of the review, which are due to be unveiled on or before Citigroup announces its first-quarter earnings on April 16, are still not finalised.

But people close to the process say it is likely to involve a cut of about 5 per cent of Citigroup’s workforce of around 327,000.

The restructuring is expected to lead to a charge of more than $1bn against earnings.

Some of the reduction will be achieved by natural wastage and other jobs will be moved to lower-cost locations, including offshore, say insiders.

Mr Prince is expected to present the restructuring as an attempt to improve Citigroup’s responsiveness to clients as much as a cost-cutting exercise.

Mr Prince blames Citigroup’s cost problems partly on failure to integrate properly the acquisitions through which the group was constructed in the 1990s.

The group has tended to operate as a collection of “silos” without focusing on the opportunities to share costs, he argues.

However, significant savings have been made in recent years.

The introduction of central computerised purchasing is saving more than $500m a year and rationalisation of information technology is expected to yield about $2bn a year.

Mr Prince has made clear he is expecting Mr Druskin to come up with big structural savings rather than more trimming.

“We’re not looking for him to squeeze the rock in terms of magazine subscriptions or black cars,” he told analysts in December.