Move by new CEO Michael Corbat will slash 4% of the bank's workforce and is intended to save $900m next year

This article is more than 7 years old

This article is more than 7 years old

The US banking group Citigroup has announced that it will cut 11,000 jobs around the world, around 4% of its workforce.

It is an early move by the bank's new chief executive Michael Corbat, and will result in pre-tax charges of $1bn against fourth-quarter earnings.

The bank did not spell out how many of the jobs will be in the United States. Most of them, about 6,200, will come from Citi's consumer banking unit, which handles everyday functions like branches and checking accounts.

Citi said that it will sell or scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay and focus on 150 cities around the world "that have the highest growth potential in consumer banking".

About 1,900 jobs will come from the institutional clients group, which includes investment banking. The company will also cut jobs in technology and operations by using more automation and moving jobs to "lower-cost locations".

Citi said it expects the cuts to save $900m next year, and slightly more in the following years.

In a statement, Corbat said the bank remains committed to "our unparalleled global network and footprint". However, he added: "We have identified areas and products where our scale does not provide for meaningful returns."

He promised that the bank would reduce "excess capacity and expenses, whether they center on technology, real estate or simplifying our operations".

Corbat became CEO in October after his predecessor, Vikram Pandit, stepped down. Pandit had reportedly clashed with the board over the company's strategy and its relationship with the government.

While the job cuts are among the first major moves by Corbat, they are in line with Pandit's blueprint.

Citi nearly collapsed during the financial crisis and had to take two taxpayer bailout loans. It has been shrinking ever since, shedding units and trying to find a more streamlined business model.

It has been a bumpy transition: earlier this year, when Citi negotiated the sale of its stake in the retail brokerage Morgan Stanley Smith Barney, it got far less than it wanted from the buyer, Morgan Stanley.