Magazine article American Banker

Citi Hoping to Cut Another $1B of Costs

Magazine article American Banker

Citi Hoping to Cut Another $1B of Costs

Article excerpt

Citigroup Inc. is looking to carve another $1 billion out of its expense base this year on top of a similar program it conducted last year.

The largest U.S. banking company, with over $1 trillion of assets and a network sprawled across the globe, is examining options ranging from putting off technology spending to cutting administrative costs and staffing, though no massive layoffs are anticipated, said a spokeswoman, who confirmed the effort Wednesday.

Sanford I. Weill, the company's chairman and chief executive officer, has been talking about the need to rein in expenses since the beginning of the year, the spokeswoman said. Citi, like many other banking companies, has had to curb spending amid a decline in business, particularly in corporate and investment banking.

Last year it sought to hold back spending by between $1 billion and $2 billion. Expenses last year rose 3% from the previous year, to $39.6 billion, and revenues rose 6%, to $80.1 billion, according to Citi's financial statements. Expenses in the first quarter of this year dropped 7% from the same period last year, to $9.8 billion, and revenues climbed 4%, to $21 billion.

The company's growth through acquisitions in the last two years has created opportunities to cut costs by eliminating redundancies. Among other things, Citi has bought Associates First Capital Corp., European American Bank, and Mexico's Banamex, and it recently announced plans to buy the San Francisco-based Golden State Bancorp for $5.8 billion.

"In a company like that, it's very easy to build up things," said Henry C. Dickson, an analyst at Lehman Brothers. "They are trying to eliminate waste and bureaucracy and make sure that they are operating lean."

Indeed, "lean-and-mean" is a hallmark of Mr. Weill's management philosophy, observers said. He has worked for the last couple of years to demonstrate to Wall Street and potential investors that his company can perform well, even during a downturn in financial markets. …

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