Citigroup Inc. (NYSE:C) has been trying to come back from the big crash of 2008, plus had some questionable practices that had resulted in a few lawsuits in recent years, which have affected the company’s image and stock price. CEO Vikram Pandit left in October, and Michael Corbat has taken over the company. One of his first bold steps came in December when he announced that Citigroup would shut down consumer banking in five countries, and there is talk that the bank is not done with its trimming.
Citigroup Inc. (NYSE:C) announced the end of consumer banking in Pakistan, Paraguay, Romania, Turkey and Uruguay, which shaves 11,000 jobs off the payroll and provides an estimated $1.1 billion in annual savings. A couple of sources have indicated that there is more to come as the bank is looking to reduce overhead and grow profits. Overall, Citigroup has some kind of presence in 100 countries, and serves consumers in 40 of them. The bank is continuing to assess its presence in other countries and may look to cut back in some other places where the expenses to operate are not producing a reasonable return for the bank. Cost-cutting seems to make sense to some investors.
“If they’re not going to have a significant presence, they shouldn’t be there,” said Mark Mandell of Dalton Investments, a Citigroup Inc. (NYSE:C) investor. It’s reported that of those countries outside the U.S., three make up half of the bank’s consumer loans, and two-thirds of the 40 countries with consumer banking presence by Citigroup account for less than $2 billion each of the bank’s nearly $2 trillion in total assets. Argentina, Thailand and Russia are among some of these “small fish.”
What do you think about Citigroup Inc. (NYSE:C) and its downsizing? Do you support it, and what do you think the ultimate effect will be on the bank and its stock? If you don’t support, it, why not? Let us know your thoughts in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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