Citigroup to axe 11,000 posts in £620m purge

Citigroup, fresh from a boardroom tussle that led to Vikram Pandit's ousting from the chief executive's chair, announced 11,000 redundancies yesterday, a move that will cost the financial behemoth more than $1bn (£620m).

Its shares ticked upwards as it released news of 1,900 lay-offs in its institutional clients business, 6,200 in its consumer banking arm and 2,300 in its back office. Other divisions are also expected to see cuts as the bank pares down its staffing numbers.

The cuts – presented as a "repositioning" – will land Citi with a bill which it will absorb as a charge of $1bn in the fourth quarter of 2012 and $100m in the first quarter of 2013. It expects to save more than that amount by 2014 as a result of the cuts.

Michael Corbat, who replaced Mr Pandit in October, said the cuts were part of the series of actions taken in recent years to make the business leaner as it attempts to heal the wounds endured during the financial crisis by shedding non-core functions.

"These actions are logical next steps in Citi's transformation," he said. "While we are committed to – and our strategy continues to leverage – our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns. And we will further increase our operating efficiency by reducing excess capacity and expenses, whether they centre on technology, real estate or simplifying our operations."

The business, he added, had "come a long way over the past several years".

News of the cuts refocused attention on the influence of Citi's chairman, Michael O'Neill, widely seen as a key mover in Mr Pandit's abrupt departure and Mr Corbat's instalment at the top of one of the world's largest financial businesses.

Citigroup's new boss, Michael Corbat, is known as a ruthless cost-cutter who turned around Bank of Hawaii by focusing on its core businesses.