Citigroup Cutting Jobs in Bid to Cap Costs Citigroup will eliminate 17,000 jobs in a sweeping re-organization, while moving other jobs overseas. Savings are projected at $9 billion over three years. Shareholders had pressed the company to cut rising expenses.
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Citigroup Cutting Jobs in Bid to Cap Costs

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Citigroup Cutting Jobs in Bid to Cap Costs

Citigroup Cutting Jobs in Bid to Cap Costs

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NPR's business news starts with restructuring of the nation's biggest bank.

Tens of thousands of jobs may be eliminated or moved overseas as part of a reorganization of Citigroup. An official announcement is expected later today. David Enrich is covering this story for the Wall Street Journal. He joins us now. Good morning.

DAVID ENRICH: Good morning.

INSKEEP: Everybody's heard this name, Citigroup. But can you explain some of the things this giant company does?

ENRICH: This is the world's biggest bank. They have operations all over the world ranging from retail banking, the branches that you see on every street corner, to mortgage loans, auto loans, student loans, to - and some more complicated operations all over the world that involve investment banking and trading and very sophisticated financial products…

INSKEEP: They're loaning money to Third World countries as well as to mortgage lenders - mortgage borrowers in the States.

ENRICH: To governments, all sorts of governments, Third World countries, First World countries. Their financial activities spans to just about every area in the world.

INSKEEP: Which was the point of forming this conglomerate, so it could do everything and have this giant economy of scale. Now, how is it going to be reorganized?

ENRICH: Well, they're looking at all sorts of things. It ranges from, as you said, tens of thousands of job cuts or relocations to more mundane changes such as trying to make more efficient use of real estate, streamlining some of their technology systems.

The problem for Citigroup is that they've grown over the past 10 years into the world's biggest financial services company and they haven't ever taken big steps to try and combine some of their systems to make things more efficient. So this is something that a lot of other banks over the years have done. And Citigroup is kind of behind the curve on it.

INSKEEP: Is there something forcing them to take those steps now that they haven't taken in the past?

ENRICH: Yeah, there it is. Citigroup's CEO, Chuck Prince, is under a lot of pressure from investors because costs has been rising much faster than revenues of the company.

And his job is basically on the line this year. He needs to show that he can maintain discipline, keep costs low. And shareholder pressure is really has been mounting, so he needs - this is something that he has acknowledged, really, is a reaction in part to shareholder frustration with the company's profits and the company's stock rates, which has been essentially flat over the past four or five years.

INSKEEP: What sort of banking jobs can you move overseas?

ENRICH: Mainly, primarily what are called back-office jobs, which are things such as people in call centers, the people who process loans, service loans; if you're behind on a loan payment, the person you're talking to. Right now for Citigroup there's often a call center in Florida, Texas, Arizona, places like that. A lot of those jobs are going to be moved overseas to places like India, Indonesia.

There also are a lot of kind of technology jobs that Citigroup uses internally to run all of its incredibly complex systems that basically power the company, that can be, can be shifted overseas. Those are the same kind of jobs that are being shipped overseas but overseas by other companies. This isn't Citigroup-specific; it's just that Citigroup is a little bit behind other companies in actually taking these steps.

INSKEEP: Well, now, when you talk about a bank moving jobs overseas, is there also a reflection here of the world economy, that there are more and more lending opportunities, financial opportunities overseas relative to the United States?

ENRICH: The thing that sets Citigroup apart from any other financial services company in the world is the breadth of its international activities. In terms of what's going to be announced today, I think that's more a reflection of just the tough environment they're facing in terms of cost, cuts, and not so much about them wanting to expand overseas, although that certainly is a reflection. And I'm sure that's one of the ways they're going to try and spin it.

INSKEEP: You said that's how they'll spin it?

ENRICH: Well, they're very sensitive, because they got 300,000-plus employees around the world. They're a $250 billion company and they don't want to be seen as downsizing. They want to be seen as making them more nimble, a more effective operation that actually positions them to grow more. Now, the struggle that shareholders are really most interested in the cost - it's a balance for them. They see this as making it more efficient for them to grow, more possible for them to grow in the future.

INSKEEP: Mr. Enrich, thanks very much.

ENRICH: My pleasure.

INSKEEP: David Enrich is a reporter for the Wall Street Journal.

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