Citigroup announced on Wednesday a new plan to cut more than 11,000 jobs in an attempt to cut company costs. The plan is seen by many as a daring move by new Citi CEO Michael Corbat.
According to the Associated Press, the cuts will eliminate approximately 4 percent of the banking empire’s total workforce. A majority of the cuts will come from the bank’s consumer banking unit, the section that is responsible for handling more day-to-day functions like branches and checking accounts.
Many of the cuts are expected to occur in regions with low growth potential. The bank identified the countries of Paraguay, Pakistan, Romania, Turkey and Uruguay as primary targets for cuts, stating plans to sell or reduce consumer operations in those areas. Citi did not comment on how many job cuts it has planned for operations within the United States. Approximately 1,900 job cuts, or roughly 18 percent of the overall cuts, are the result of technological advancements and automation.
While many American’s may cringe at the sound of more job cuts, Citibank share owners were relieved. Shares of Citibank stock jumped 4 percent to $35.77 after the announcement, while other banking institutions reported only moderate gains.
Banks have recently been on the lookout for other ways of making money now that new government regulations are reducing former sources of income, like marketing credit cards to students.
Citibank was hit particularly hard during the financial crisis of 2008, when the international bank received two bailout loans from the United States’ taxpayers amounting to roughly $25 billion.
Wednesday’s announcement is sure to raise the eyebrows of taxpayers throughout the nation, especially if it turns out that the bank has plans to slash American jobs as well. A significant portion of the country decried the government’s decision to bail out the banks that were ‘too big to fail’ in 2008. The fact that the Citibank received money from the same people it may be planning to eliminate from its workforce will likely be met with outrage from a significant amount of Americans.
Still, there are others who argue that the company must remain profitable if it is to remain in business. And if that requires slashing jobs, so be it.
Citi’s new CEO Michael Corbat seemed to ignore the implications of the current cuts, apparently under the impression that the cuts are necessary for the future success of the company. Corbat stated that Citi will remain committed to its “unparalleled global network and footprint,’’ though many will surely argue that the banks primary commitment should be to those who saved it from bankruptcy, not shareholders.