NEW YORK – Citigroup Inc. (C), the nation's largest financial institution, said Wednesday it will eliminate about 17,000 jobs as part of a companywide restructuring to reduce costs and improve profit.
That amounts to about 5 percent of the bank's 327,000-strong work force. Citigroup said its plans include "shrinking the size of corporate centers," several of which are in New York. It also expects to move some 9,500 jobs to lower-cost locations.
Still, the elimination of the jobs won't reduce the bank's work force, but merely slow its growth, Citi executives said.
Robert Druskin, Citi's chief operating officer who developed the restructuring plan over the past three months, told a conference call with Wall Street analysts they should expect Citi's headcount to grow this year because of acquisitions and plans to open new branches, especially overseas.
"But that rate of growth will be at a significantly diminished rate," Druskin said.
Citigroup has a number of acquisitions in the works. It is expanding operations in China and earlier this month announced the purchase of a bank in Taiwan. Citi also has made a tender offer for a Japanese brokerage.
In early trading, the bank's shares were down 54 cents at $51.86 on the New York Stock Exchange.
The bank said in a statement that with previously announced information technology savings, the overhaul will save the New York-based bank about $2.1 billion in 2007, $3.7 billion in 2008 and $4.6 billion in 2009.
Citigroup executives have been under pressure from investors and analysts to get a handle on the bank's burgeoning expenses, which grew 15 percent last year, twice the pace of revenue growth. As a result, its shares have lagged those of other big money center banks.
Citigroup said it will record a pretax charge of $1.38 billion in the first quarter of 2007, and additional charges totaling approximately $200 million pretax over the subsequent quarters of 2007. The bank reports its first-quarter earnings next week.
Charles Prince, the bank's chairman and chief executive officer, said that implementation of Druskin's recommendations "will improve business integration as well as our ability to move quickly and seize new growth opportunities."
Prince also emphasized that more expense cutbacks were possible, saying that Citi was adopting "a continuous approach to improving our efficiency — this is not a one-time effort."
Druskin said that the review "did not simply give the entire organization an arbitrary number to cut" but, instead, looked at each business operation and benchmarked it against peers.
He added: "We have been very careful to maintain our revenue generating capability — in fact, this effort should enhance our capacity to grow."
Druskin said more jobs would be cut overseas than in the United States. He said the bank was more likely to rely on layoffs than on attrition to make sure the targeted positions were vacated.
Among the anticipated changes are:
• Elimination of layers of management, in some cases increasing the average number of employees that report to each manager.
• Staff reductions will include some at corporate headquarters.
• Expanding centralized procurement and requiring more sharing of resources, such as legal and human resources teams.
• Consolidation of some back-office, middle-office and corporate functions to eliminate duplication.
"More than 9,500 jobs will be moved to lower-cost locations, both domestically and internationally, with about two-thirds through attrition," the report said.
Prince said on a recent trip to New Delhi that some of the back-office jobs would move to India, where Citi already operates call centers.
The 2007 cost savings were broken down as $650 million in the global consumer division, $400 million in markets and banking, $175 million in wealth management, $375 million in corporate operations and technology and $100 million in "other." That's in addition to $400 million previously announced information technology savings, Citigroup said.
Citigroup, which had assets of more than $1.8 trillion at year's end, is one of the world's largest financial institutions. It operates in more than 100 countries.