Citigroup is cutting costs like it’s going out of style.
The third-biggest bank by assets announced it will chop 11,000 jobs, or about 4 percent of its workforce, today to boost profitability and scale-down the once-heralded financial supermarket.
After former CEO Vikram Pandit left in mid-October, Citigroup (C) realigned focus toward operations and efficiency. Mike Corbat, who took over the top spot, made good with his word and announced the large-scale job cuts that is expected to save $900 million next year and $1.1 billion in 2014, the release said. More than half of the cuts will come from the global consumer banking unit, followed by operations.
Citi shares popped during trading by 7.2% to $36.76 on the news, the biggest gain since the company announced better-than-expected earnings on Oct. 15.
Here’s what some professional nerds have to say about the news:
Mike Mayo, analyst at Crédit Agricole Securities, said this morning on CNBC’s Fast Money that it was a step in the right direction. “Citigroup has a chairman and a new CEO that’s willing and able to take the tough actions for sustainable growth, I think, and so you have some positive indication of that today,” he said. Mayo reaffirmed his “outperform” rating for the bank today.
Ponytailed Ed Najarian, of ISI group, was also pumped about the cuts. “We have a high level of conviction that this is only CEO Mike Corbat’s first move to improve Citi’s operating efficiency after being named CEO in mid-October,” he wrote in a note to investors that was reported in wsj. “We are convinced C [Citi] will outline even more cost cutting initiatives in the future, which is exactly what mgmt should be doing in a challenging revenue backdrop and is what investors want to see. Thus far, we’re pleased with this initial expense saving plan, especially given that Corbat has only been CEO for about seven weeks.
David Trone, head of U.S. Banks & Brokers Research at JMP Securities was not surprised about the job cuts. “I’m not surprised. Citigroup was a company that had a lot of bureaucracy and in a lot of different parts of the world, a lot of different products,” the bald-headed Trone told Carl Quintanilla this morning on Squawk on the Street. “I think the investment community had been looking for that for some time.”
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