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Citigroup to cut 10,400 jobs
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December 15, 1998: 3:23 p.m. ET
Financial services firm to take $900M restructuring charge, mostly in 4Q
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NEW YORK (CNNfn) - Financial services giant Citigroup said Tuesday it plans to lay off 10,400 workers in a global restructuring plan that is expected to cost $900 million.
The plan, which already has been approved by Citigroup's board of directors, will eliminate 6 percent of the company's worldwide work force. The largest portion of these reductions will come from the consumer business and 35 percent will come from the United States.
Citigroup said most of the $900 million restructuring charge will be recorded in the fourth quarter of 1998.
"This is an important step in assuring that the company's performance in 1999 and beyond is in line with the promise of the merger," said John S. Reed and Sanford I. Weill, company chairmen and co-chief executive officers.
Citigroup was expected to trim about 8,000 jobs from its 160,000-member work force. However, recent reports have suggested that number might be higher.
As a result of its cost-cutting efforts, which will affect all businesses and geographic regions, Citigroup expects to achieve pretax cost savings of about $680 million next year and annual savings of about $975 million pretax in 2000.
The company's initiatives include regional consolidation of call centers and other back- office functions worldwide, reduction of management layers, sales force restructuring and integration of redundant marketing and product management groups.
The consumer business also will exit several non-strategic operations.
Citigroup's cost cutting campaign is designed to unlock the benefits of the $70 billion megamerger between Citicorp and Travelers Group Inc., which created Citigroup.
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.
Shares of Citigroup (C) were up 1-3/4 at 47-13/16 on the New York Stock Exchange Tuesday following the announcement. 
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Citigroup
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