Citigroup, the global banking giant, is preparing a round of cost cuts that could result in as many as 15,000 job losses and a $1 billion plus bill for redundancy pay-outs and other charges. The shake-up seems to be set to move beyond than Wall Street had been expecting. The restructuring process could result in significant job cuts across the company’s US retail bank and at its European headquarters in London. Speculations are taking rounds that around 5 per cent of the company’s 327,000-strong global workforce could be axed.
Acting under immense pressure from investors the firm is contemplating to either layoff or to reassign more than 26,000 jobs as part of a broad effort to cut costs and streamline the bank’s unwieldy global operations. New York Times reported that Citigroup is planning to cast off 10,000 to 12,000 jobs this year. Some 14,000 additional positions will be lost to attrition or relocated from high-cost locations including London, Hong Kong and New York, where the company is based.
Opinions of experts are divided on the restructuring plans of the company. Some have argued that the bank could eliminate more jobs, while other analysts are of the view that savings will come from different areas and that it is crucial not to sacrifice revenue growth in the coming reorganization. In general, market analysts are not shocked with the planned overhaul and have said that the jobs cuts are significantly less than what was expected.
As a matter of fact, the banking giant’s plan on cost cutting reflects a belief among shareholders that Citigroup has no revenue growth opportunities. While some analysts maintain that steep cost cuts may not be the best solution to Citi’s perceived problems as it is underinvested in technology and branches.
In addition to it, there has been speculation in recent times that the solution to Citi’s misery may be divesting one of its divisions and focusing its resources more efficiently. Smith Barney, the brokerage unit, has been repeatedly cited as the best opportunity to get a big price tag in a sale. However, as of now, there is no signal that the firm is contemplating such a move. Nevertheless, the firm has sold off its asset management division to Legg Mason last year.
