Citi Cuts Could Include Call Centers, Brokerages

Gary Townsend, an analyst at Friedman Billings Ramsey in Arlington, Va., says the plan to cut costs comes at a time when revenue growth is a challenge for many major banks, and handing out pink slips might be one way of boosting EPS.

PNC Financial Services (PNC Quote) took the job-cut tack two years ago when it began a two-year cost-cutting initiative to pare its work force by 3,000, or 12%, to good effect.

But large staff cuts by Citi might not be sufficient to appease investors.

"I think the way you get to be a great company is by growing revenues and being prudent in your operating, says Jim Huguet, co-CEO at Clearwater, Fla.-based asset management firm Great Companies, which holds about 142,000 shares of Citi stock.

Dick Bove, securities industry analyst at investment bank Punk Ziegel, believes cutting costs alone is a mistake.

"It's one of the worst ideas I've ever heard," says Bove, who has been a vocal critic of Citi.

"When you have a company that has underinvested, it is not surprising that it shows weak revenue growth," Bove says.