NEW YORK (
took another step to pare down its sprawling businesses Tuesday, unveiling plans to downsize its CitiFinancial consumer finance business, likely in order to make the unit a more attractive target for acquisition.
Citigroup Chief Executive Vikram Pandit
A company spokeswoman confirmed to
that Citigroup expects to shut down 330 of its CitiFinancial branches in the United States and cut a total of between 500 and 600 positions as part of the restructuring.
Under the plan, CitiFinancial is separating its U.S. business into two segments -- full-service branches and servicing centers. The full-service branches will continue to originate and service personal loans, refinancings and home equity loans, while the servicing centers will provide extended support, such as loan modifications, and feature larger offices with extended operating hours.
Citigroup is converting 182 existing branches to servicing centers, which will leave about 1,330 full-service CitiFinancial branches after the closings, the spokeswoman said via email.
"This reorganization will enable CitiFinancial to continue lending to US consumers while better serving its customers in need," CitiFinancial's CEO Mary McDowell said in a press release. "In addition, through CitiFinancial Servicing, we'll be better equipped to help customers stay current on their loans and achieve their financial goals in today's challenging economic environment."
"A lot of potential buyers like to see a business that has future growth potential; and as the economy has changed over the last couple of years, we are not lending as much as we were," McDowell told
. "If you spread the customers over all the branches that we had, while you can grow the business, it's very hard to grow the individual branch."
CitiFinancial is part of Citi Holdings, which the bank formed in early 2009 to temporarily hold assets and businesses Citigroup was looking to sell or unwind. While some progress has been made, including the March spin-off of
, the company has had a tough time selling other businesses, including
. The company has said that it continues "to pursue divestiture and asset reduction opportunities in a way that is in the best interest of all of stakeholders."
Pandit said in April that the company's goal remains to lower assets by 40% from their third-quarter 2007 peak. That leaves it with nearly a half trillion to shed from its balance sheet.
The bank intends to re-name CitiFinancial after the segmentation is complete. The new brand name is expected to be unveiled by the end of this year.
Citigroup shares fell 2.8% to $3.85 on Tuesday. Volume was fairly light, with roughly 550 million shares trading hands, much less than its average three-month trailing daily trading volume of 814 million.
--Written by Laurie Kulikowski in New York.