Citicorp/Traveler's Group

Citigroup Plans 10,400 Job Cuts

By Patricia Lamiell
AP Business Writer
Tuesday, December 15, 1998; 3:10 p.m. EST

NEW YORK (AP) — Citigroup announced 10,400 job cuts today, more than had been expected, as part of a major restructuring that will cost the company $900 million in lost earnings.

The announcement marks the first time the company has divulged details of its huge restructuring program aimed at consolidating the operations of Citicorp and Travelers Group, which merged in October to create the financial services giant.

The staff cuts represent 6.5 percent of the company's global work force of 160,000. Citigroup said 35 percent of the cuts, or about 3,600 jobs, would be cut in the United States.

Investors applauded the cuts, as Citigroup shares rose $2.18 3/4, nearly 5 percent, to $48.25 on the New York Stock Exchange.

Citigroup's board of directors approved a $900 million charge against earnings today, most of which will be taken in the fourth quarter of this year.

The cost-cutting efforts are expected to save about $680 million in 1999 and $975 million in 2000.

The job cuts will be made in call centers and other back office functions worldwide, as well as in management, sales and marketing. Citigroup said it expects additional savings by more tightly managing the use of outside consultants and travel.

The company said it save $350 million in its corporate businesses, including emerging markets and investment banking as it eliminates staff duplications across former Citibank and Travelers operations.

Source:                        http://www.washingtonpost.com/wpsrv/business/longterm/citigroup/citigroup.htm

 

 

       Citicorp, Travelers OK record merger

By Skip Wollenberg/ Associated Press

   
    NEW YORK -- Citicorp and Travelers Group are merging in a record $70-billion deal combining the nation's second-biggest bank with a leading provider of financial services.
    The deal easily surpasses the previous record price of $37 billion that the telecommunications company WorldCom is paying for MCI.
    The new company would be called Citigroup Inc., and it would have more than 100 million customers in 100 countries.
    The new Citigroup would use the trademark Travelers red umbrella as its logo. It would have assets of almost $700 billion, revenue of nearly $50 billion and operating income of approximately $7.5 billion.
    Citicorp is the parent company of Citibank, an international banking powerhouse, and also is the world's largest issuer of credit cards with some 60 million bank cards.
    Travelers Group is an insurance, brokerage and investment banking giant. Its operating companies include Salomon Smith Barney, Travelers Life & Annuity, Travelers Property Casualty Corp., Primerica Financial Services, and Commercial Credit.
    The deal comes as banks and brokerage houses are rushing to consolidate in order to cut costs and provide a wider array of financial services.
    The companies are betting on a change of federal laws, going back to the Depression era, that prohibit banks from entering the insurance business. The deal is subject to regulatory approval, but the companies said current rules would allow the combined company to retain and operate all businesses for two years, with the possibility that the Federal Reserve Board could grant up to three one-year extensions.
    At the end of that period, the companies said they would evaluate alternatives in order to comply with whatever laws then apply to bank holding companies.
    The heads of the two companies, John S. Reed of Citicorp and Sanford I. Weill of Travelers, will be co-chairmen and co-chief executives of the new company.
    Following the merger, each company's shareholders will own 50 percent of the combined enterprise.
    The deal is expected to be completed in the third quarter of this year.

Source: http://detnews.com/1998/biz/9804/06/04070004.htm