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Citicorp to Cut 1,000 Consumer Banking Jobs

November 18, 1987|From Reuters

NEW YORK — Citicorp, the nation's largest bank holding company, will eliminate 1,000 jobs in consumer banking in the next 14 months by combining marketing activities in the New York area, a Citicorp spokesman said Tuesday.

In addition, a source within the bank said Citicorp plans to cut 10% of its 11,000-person investment bank staff. However, a Citicorp official denied any cuts were planned in investment banking.

U.S. banks have been under pressure to cut costs to make up for losses recorded in the second quarter, when they set aside large reserves for potentially bad Third World loans.

On Monday, Chemical New York Corp. said it will eliminate 575 jobs by transferring credit card operations in Chicago to its main processing facility in Jericho, N.Y., as part of a previously announced plan to cut employment by 10%.

A Citicorp spokesman would not estimate savings resulting from these layoffs.

"Since there are 60,000 people in the retail operation, I do not know in dollar terms the savings, but it signals additional evidence of restructuring in major banks," said James McDermott, analyst at Keefe Bruyette & Woods.

"The move was driven by a business decision, where we want the individual bank to be in 10 years, but it doesn't hurt along the expense line," the spokesman said. Individual banking refers to Citicorp's consumer business.

He said 300 of the 1,000 jobs would have been eliminated anyway through attrition.

In the past two years, Citicorp has cut about 5,000 people in its institutional bank segment, which serves corporate customers. Most of these layoffs occurred overseas, the spokesman said.

Analysts have been calling for reductions in Citicorp's growing expenses, especially in investment banking operations.

Expenses in that unit were 30% higher in the third quarter of 1987 compared to a year earlier. Revenue, by contrast, grew only 12% over the same period.

Analysts said a 10% reduction in the investment bank work force was not unreasonable.

Moreover, industry sources said Citicorp had canceled all major advertising for its investment banking business for the rest of the year as part of its effort to lower expenses.

"It is safe to say Citicorp will retrench and some cuts will occur, especially in the European investment bank where the revenues have been disappointing," one analyst said.

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