Citigroup Job Cuts Aimed at Pleasing Shareholders Citigroup, the world's largest financial services company, says it will eliminate about 5 percent of its work force. It's part of an effort to increase profits and appease shareholders, who have been unhappy about the company's financial performance.
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Citigroup Job Cuts Aimed at Pleasing Shareholders

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Citigroup Job Cuts Aimed at Pleasing Shareholders

Citigroup Job Cuts Aimed at Pleasing Shareholders

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STEVE INSKEEP, host:

Citigroup says it's going to eliminate about five percent of its workforce. This is part of an effort to increase profits and appease shareholders who have been unhappy about the company's performance. This giant company is based in New York, which is where we found NPR's Jim Zarroli. And Jim, just very basically, first, what does this company do?

JIM ZARROLI: Well, Citigroup is the world's largest financial services company. It has interests in just about anything you can imagine - investment banking, consumer banking. It does just about everything.

INSKEEP: And on continents all across the world. So why is it taking this step? Why do these cutbacks now?

ZARROLI: Well, this has been a really good time for banking because the economy is doing well. But Citigroup has been trailing some of its competitors. Right here in the New York market, which is Citigroup's home base, the number of customers it has has been stagnant, but some of its competitors, like Chase, have been growing.

Last years, the company's expenses rose a lot more than its profit. So a lot of investors have been unhappy. They include the Saudi billionaire Prince Alwaleed, who is the largest shareholder in the company. So Citigroup really had to do something to show Wall Street that it's on top of the problem, so right now it's been making kind of a big show of cutting expenses, trying to become more efficient.

INSKEEP: This has got to be a delicate move for a giant company like this because you would not want to say, oh, we're just going to acknowledge that we're going to get smaller.

ZARROLI: Right. And that's part of the big problem for Citigroup. They have to cut costs. They have to reduce expenses. Their management is very top heavy. But at the same time, you can't cost too much. The other banks are all investing in the industry. They're trying to do more. You can't grow by cutting.

INSKEEP: So how does Citigroup explain the strategy?

ZARROLI: Well, Citigroup says it's done a big review of its staffing levels and it's found too much management. So it wants to work to - one of the things it wants to do is to bring managers a lot closer to the people who interact with customers. It also says it wants to have fewer managers. Managers, a lot of them have just three or four people working for them. So there's a lot of room for consolidation. As I said, the company has to cut costs, but at the same it needs to compete with Chase and Bank of America. And they're spending more money.

INSKEEP: Does this move also mean that jobs are going overseas in Citigroup?

ZARROLI: It probably will. The company says it wants to eliminate 17,000 jobs, that's about five percent of its workforce. The jobs will be cut through attrition. But the company also says a lot of them will be moved to low-cost areas, both domestically and overseas, which is likely to mean outsourcing to China and India. The company's also going to do the usual close some offices in some places and just look for redundancies.

One of the things that we should point out is that at the same time the company says while it's going to be making some cuts, it's also going to be adding jobs, so it's overall workforce will be about the same this year as it was last year.

INSKEEP: Well, let me ask. When it's adding jobs, is it also shifting to a different part of the world, saying, for example, that there's going to be more business in the future in Asia than as the growth in the United States, say?

ZARROLI: Yes. And I think that is one of the things that's going on. One of the reasons why they are eliminating jobs in this country, but also say that they will save jobs in the long term is that they're expanding in markets, like India, like China, where costs are less.

INSKEEP: NPR's Jim Zarroli, thanks very much.

ZARROLI: Okay.

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