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Citigroup today announced a series of repositioning actions that will further reduce expenses and improve efficiency across the company while maintaining Citi’s unique capabilities to serve clients, especially in the emerging markets. These actions will result in increased business efficiency, streamlined operations and an optimized consumer footprint across geographies.
Michael Corbat, Citi’s Chief Executive Officer, said, “These actions are logical next steps in Citi's transformation. While we are committed to-- and our strategy continues to leverage-- our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns. And we will further increase our operating efficiency by reducing excess capacity and expenses, whether they center on technology, real estate or simplifying our operations.”
Due to this repositioning, Citi expects to record pre-tax charges of approximately $1 billion in the fourth quarter of 2012 and approximately $100 million of related charges in the first half of 2013. Citi currently expects that the repositioning will generate $900 million of expense savings benefitting 2013 results and that the annual expense savings will exceed $1.1 billion annually beginning in 2014. Citi also expects the repositioning actions to have a negative impact on annual revenues of less than $300 million. These actions will result in a reduction of more than 11,000 positions.
Citi expects the repositioning activity to affect the following businesses and functions:
Institutional Clients Group (ICG): Approximately 25% of the announced fourth quarter repositioning charges are expected in Securities & Banking with another 10% in Transaction Services. The repositioning actions are expected to result in a reduction of approximately 1,900 positions, of which more than half are in the Operations & Technology functions that support the business. The actions are designed to streamline our client coverage model in Banking and improve overall productivity in our Markets business, especially in areas experiencing continued low profitability such as cash equities.
Global Consumer Banking (GCB): Approximately 35% of the fourth quarter repositioning charges are expected to be incurred in Global Consumer Banking, resulting in a reduction of approximately 6,200 positions, of which approximately 40% are in the Operations & Technology functions that support the business. As a result of the repositioning actions, Citi expects to either sell or significantly scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay.
Consistent with Citi’s strategy of focusing on the 150 cities that have the highest growth potential in consumer banking, Citi will optimize its branch footprint and further concentrate its presence in major metropolitan areas. The markets affected by the reductions include Brazil (14 branches), Hong Kong (7), Hungary (4), Korea (15), and the United States (44).