NEW YORK (Reuters) -- Citigroup Inc. Chief Executive Charles Prince told employees he plans Wednesday to announce cost cuts that will make the bank "nimbler" and should help boost revenue, even as he acknowledged, "you can't shrink your way to greatness."
The cuts follow a nearly four-month review by Chief Operating Officer Robert Druskin of expenses at the largest U.S. bank.
Shareholders are pressuring Prince to bolster Citigroup's share price and slash its $52 billion operating expense base even as the bank grows, especially outside the United States.
Operating costs increased 15 percent, compared with a 7 percent gain in revenue. Saudi Prince Al-Waleed bin Talal, the bank's largest individual shareholder, last July called for "draconian" cuts.
In a memo to employees Monday, Citigroup's Prince said the bank plans to consolidate some back-office, middle-office and corporate functions; move some work to lower-cost areas; and make its technology platforms more efficient.
"This review has not been undertaken on the basis of giving the entire organization an arbitrary number to cut," Prince wrote. "I firmly believe that you can't shrink your way to greatness. Our ultimate objective is to drive growth."
Reuters obtained a copy of the memo, and a Citigroup spokesman confirmed its contents.
Published reports have said Citigroup might eliminate 15,000 jobs, or about 5 percent of its work force of 327,000.
Analysts have said the cuts could, and might need to, go deeper to meaningfully improve the bank's bottom line.
Citing unnamed people within the bank, CNBC television on Monday said Citigroup might cut 45,000 jobs, though it wasn't clear if the cuts would come through firings or attrition.
Citigroup (Charts) shares closed Monday up 1 cent at $51.58. They are little changed since news of the extent of the possible cuts was first reported on March 26.
Since Prince became chief executive in October 2003, the shares are up 13 percent, trailing the 29 percent gain in the 24-member Philadelphia KBW Bank Index.
Source : http://money.cnn.com/2007/04/09/news/companies/bc.citigroup.expenses.reut/?postversion=2007040918
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