Citigroup saying goodbye to consumers
Citigroup will reduce the size of their consumer banking division in major cities around the world. While the closings will hurt Citigroup’s reputation as the leading global bank in the United States, they feel this is the best option because they simply don’t have enough branches to compete. With consumer banking making up half the company’s revenue, this is likely to affect their bottom line.
According to reports from Reuters, Citigroup has gone from targeting 120 of the world’s top 150 cities to scaling back operations and focusing on only 100 cities where the company has the best chance to succeed. As a result, they will be leaving cities with slower growth, such as Tokyo and Lima.
In 2013, Citigroup sold a large portion of their Texas branches to BB&T while holding onto their Dallas and Houston markets. Citigroup will now be closing their Dallas and Houston branches and focusing their efforts in the six US cities where they continue to have a significant presence. The bank will still have consumer branches in Miami, Washington, New York, Chicago, San Francisco and Los Angeles.
Restructuring, restructuring, and more restructuring
The financial losses of the consumer bank closings that are underway will take some time to recoup. While the closings will undoubtedly hurt Citigroup’s profits, they are hoping to more than make up for the losses in the long run by significantly reducing costs.
In an interview with the Reuters news agency, “Chief Executive Michael Corbat has announced $2.4 billion of additional restructuring costs in the last two years. The bank hopes the spending will eventually save some $3.4 billion annually. The charge, in addition to an expected $2.7 billion charge for litigation, largely involving other businesses, is expected to all but wipe out Citigroup’s profits for the fourth quarter.”
It’s no secret that Citigroup has had some struggles in the past. With the recession hitting them hard and failing stress tests in recent years, the bank has been looking to scale back. Moving forward, they hope the closings will allow them to focus on the areas where they are most successful, says CEO Mr. Corbat in a statement, “I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders.”