Citigroup Inc. (NYSE:C)’s latest round of cost-cutting measures involves eliminating 11,000 jobs, which will result in a $1 billion charge in the current quarter.
Most of the company’s eliminations will be in the consumer banking unit. It also plans to either sell or scale back its operations in Uruguay, Turkey, Romania, Paraguay, and Pakistan. Other departments affected by the cuts include the global functions and operations and technology group.
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Today’s statement from Citigroup Inc. (NYSE:C) also said its investment banking and transaction unit will lose about 1,900 positions. The statement said the company is trying to improve productivity, “especially in areas experiencing continued low profitability.”
In all, the job cuts are expected to save more than $1 billion annually in expenses and result in pre-tax charges of $1 billion against the company’s earnings for the fourth quarter. The company’s reorganization is also expected to reduce annual revenues by less than $300 million.
Citigroup Inc. (NYSE:C) CEO Michael Corbat, who just took the company’s helm in October, is following in the footsteps of previous CEO Vikram Pandit, who started the cost-cutting measures before leaving his position. Corbat’s job cuts are clearly a response to the current slump in investments and trading, as well as the major regulatory overhaul that’s happening amidst the European debt crisis.
Citigroup isn’t the only financial firm making cuts to its investment banking business. Competitors Morgan Stanley (NYSE:MS), UBS AG (NYSE:UBS) and Goldman Sachs Group, Inc. (NYSE:GS) have all been making similar cuts.
Since this morning’s cost-cutting announcements, shares of Citigroup Inc. (NYSE:C) increased by more than 5 percent.