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Citigroup plans charge, cuts
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December 14, 1998: 2:25 p.m. ET
$1B restructuring charge, cost reductions may be announced this week
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NEW YORK (CNNfn) - Citigroup, the world's largest financial services firm, is expected to disclose a $1 billion restructuring charge this week, along with a massive downsizing plan that could put more than 8,000 workers in the unemployment line.
The cost-cutting moves, expected to be announced to the company's board on Tuesday, are designed to unlock the benefits of the $70 billion megamerger between Citicorp and Travelers Group Inc., which created Citigroup, the Wall Street Journal reports.
Analysts cited in the Journal said the charge could feasibly reduce costs for the new company by between $500 million and $1 billion.
Citigroup refused to comment on the report.
When the Citicorp and Travelers merger was announced in April, executives said the combined company would be focused on growing revenue, rather than cost reductions. But the volatility of global markets since then, and the havoc it has wreaked in the financial services industry, have highlighted the need for additional cost cutting.
The company's Salomon Smith Barney investment banking unit, for example, reported a third-quarter loss of $325 million, which helped bring Citigroup's pro forma net income down 53 percent to $729 million.
Citigroup has never challenged estimates that it will slash its work force of 160,000 by 5 percent, or about 8,000. The Journal reports that people close to the situation expect the number of job cuts to be slightly higher.
Citigroup has already cut some jobs. In October, Salomon announced it was reducing its payroll, and last week, the company's consumer group announced it would be cutting 150 jobs in Citicorp Investment Services, which sell mutual funds through Citibank branches.
The company's cost reductions are expected to affect all the company's business groups - asset management, consumer, and corporate and investment banking - and will be implemented in the next year or two, according to the Journal.
Much of the restructuring charge is expected to be taken this quarter, the paper reports, noting, however, the new accounting guidelines by the Securities and Exchange Commission regarding the timing of restructuring charges mean some of the charges will be taken next year.
Shares of Citigroup [C ] were trading down 7/8 at 46-7/8 Monday on the New York Stock Exchange. 
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Citigroup
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