Counterparties: A series of unfortunate repositioning actions
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Citigroup will fire 11,000 employees as part of a “series of repositioning actions”. The full press release is a meticulously assembled monument to business-speak. If only its first paragraph, appropriately skewered by Derek Thompson, could be laughed off as parody instead of pink slips for 4% of the company’s workers:
Citigroup today announced a series of repositioning actions that will further reduce expenses and improve efficiency across the company while maintaining Citi’s unique capabilities to serve clients, especially in the emerging markets. These actions will result in increased business efficiency, streamlined operations and an optimized consumer footprint across geographies.
Just five days ago, newly installed CEO Michael Corbat was faced with headlines which questioned whether Citi “had a formal cost-cutting plan”. Consider the answer an emphatic yes. The layoffs will save the company more than a billion dollars a year, about two percent of its operating costs. The cuts dwarf Citi’s previously announced plans to eliminate 300 sales-and-trading jobs, or its competitors’ much smaller reductions.
The NYT’s Jessica Silver-Greenberg writes that 80% of the layoffs will be in consumer banking and back-office roles. Bloomberg’s Christine Harper and Yalman Onaran report that Citi’s global footprint is shrinking: the bank plans to “sell or significantly scale back consumer operations in Pakistan, Paraguay, Romania, Turkey and Uruguay. It will also cut branches in Brazil, Hong Kong, Hungary and Korea, as well as the US”.
Analysts reacted with a largely blasé tone, saying the cuts were consistent with what they had projected and didn’t significantly alter their views. But the market was much more impressed: Citi’s stock closed the day up 6.4%. — Ben Walsh
On to today’s links: