Vikram Pandit hired thousands of employees and invested billions of dollars as he sought to boost Citigroup’s revenue after fighting to survive the financial crisis. His successor Michael Corbat has another idea: cut.
Bloomberg reports that Corbat will cut about 11,000 jobs, more than double the number Pandit announced in January, the New York-based company said yesterday in a statement. Citigroup also will shut branches and pull back from some emerging markets, a priority for Pandit before Chairman Michael O’Neill led his October 16th ouster.
The move counters the strategy once pursued by Pandit, who added staff in 2011 and increased costs across consumer and investment banking in a bid to expand after the crisis. The cuts reflect the board’s change in tactics, one that probably helped spur Pandit’s departure, according to Marty Mosby, a Guggenheim Securities LLC analyst.
'It is a shift in priorities and a shift in magnitude', Mosby said. 'The board was more comfortable in maximizing profitability through efficiency initiatives in lieu of trying to aggressively seek incremental growth opportunities'.
Citigroup shares surged the most since January after Tuesday’s announcement, climbing 6.3% to $36.46, the best performance in the KBW Bank Index (BKX) of 24 U.S. lenders.
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