Citigroup Inc. (C) is set to slash jobs in small-business operations. Revenue slump in these operations prompted the company to come up with this decision. However, the exact number of layoffs has not yet been decided by the bank.
Citi reported operating expenses of $13.8 billion in the fourth-quarter of 2012, which climbed 5% year over year. The rise came on the back of higher repositioning charges and elevated legal and related costs, including a charge of $305 million related to the agreement in principle reached with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board pertaining to the independent foreclosure review process. The latest job cut is expected reduce its expenses to some extent.
In Dec 2012, Citi announced roughly 11,000 job cuts worldwide, including 300 in the Mo. region. These were made in an effort to reduce expenses and improve profitability. The company anticipates making roughly $900 million of expense savings this year and $1.1 billion in 2014, based on its restructuring initiatives.
Amidst a challenging operating environment, lower returns and stringent capital norms, many global banks are downsizing businesses to meet the economic challenges. Apart from Citi, Bank of America Corp. (BAC), UBS AG (UBS) and Deutsche Bank AG (DB) are rightsizing businesses and slashing jobs to address revenue slump.
Owing to a tepid economic recovery, revenue growth has become a challenge. Therefore, to sustain and elevate profitability, several banks are currently resorting to cost-reduction measures including layoffs and bonus cuts. Until a recovery in the top line occurs, such actions are anticipated to continue.
Citi currently retains a Zacks Rank #3 (Hold).
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