- The Washington Times - Wednesday, April 11, 2007

NEW YORK (AP) — Citigroup Inc., the nation’s largest financial institution, announced that it will eliminate about 17,000 jobs, shift 9,500 positions to “lower cost locations” and consolidate some corporate operations.

The company, under pressure from investors to contain burgeoning costs, said the steps will shave more than $2 billion from the bank’s operating costs this year alone and should result in faster service for consumers and businesses.

“A lot of the initiatives undertaken in the name of expense reduction also are designed to unclog our corporate system,” Citi’s chief operating officer, Robert Druskin, said. “We want to make Citigroup a more nimble, entrepreneurial place. We want decision-making to be quicker. We want things to move through the pipelines faster.”

The 17,000 job cuts amount to about 5 percent of the bank’s 327,000-strong work force.

The Citigroup cuts will affect at least 270 of the 7,570 Citigroup employees working in Maryland, Virginia and the District, said Citigroup spokesman, Mike Hanretta.

Citigroup workers in Maryland will be hit hardest, as the company trims 236 of its 5,900 employees working in the state. Citigroup will cut fewer than 30 jobs in Virginia, and only a small number in the District.

Mr. Druskin led the structural expense review, which was aimed at reducing costs at the New York-headquartered bank and improving profit.

Citigroup executives have been under pressure from analysts and a number of investors, including Saudi Arabian Prince Alwaleed bin Talal, Citigroup’s biggest individual shareholder, to improve performance. The bank’s stock has not done as well as its peers, including Bank of America and JPMorgan Chase & Co., which have been more profitable.

The elimination of the jobs won’t reduce the bank’s work force, but merely slow its growth, Citi executives said.

Mr. Druskin said during a conference call with Wall Street analysts that they should expect Citi’s head count 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,” Mr. Druskin said.

Goldman Sachs analysts William F. Tanona and Daniel Harris predicted “a tepid reaction” by investors they said had expected deeper cuts.

The bank’s shares dropped 89 cents, or 1.7 percent, to $51.51 on the New York Stock Exchange.

Carter Burgess, managing director of the Directorship Search Group, a recruiting firm based in Greenwich, Conn., said that “the question is, if all these areas for cutting expenses exist, why wasn’t it done sooner?”

He noted that Citigroup, like many of the giant money center banks, was built through a series of mergers and acquisitions and that “it’s not totally clear you can make all of this work efficiently together.”

Charles Prince, the bank’s chairman and chief executive officer, said that implementation of Mr. Druskin’s recommendations “will improve business integration as well as our ability to move quickly and seize new growth opportunities.”

Mr. 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.”

The changes announced yesterday include eliminating unnecessary layers of management, reducing staff at corporate headquarters and other locations, expanding centralized procurement and consolidating some back-office and middle-office functions to eliminate duplication.

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