Citi’s Efficiency Machine to Claim More Victims
If Citigroup Chief Executive Michael Corbat has done anything in his five months on the job, it’s distance himself from his predecessor, Vikram Pandit, who was faulted by some for Citi’s bloated and inefficient workforce. Corbat took another step in that direction on Tuesday by telling investors that the bank intends to “significantly scale back or exit certain business lines” that don’t return an ample yield.
The target will be emerging markets – business units in in 21 countries that are among the least efficient, according to Bloomberg. These markets, which Corbat declined to specifically identify, have an unsustainable efficiency ratio, or expenses as a percentage of revenue, of 73%.
Eighteen other countries, including the U.S. and the U.K., are being marked as “Optimize Then Grow” markets, meaning Citi won’t exit them but will look to improve their efficiency ratio. The bank will look to invest in its most efficient markets, including Mexico, Singapore and China, Corbat said.
Citi has been wildly inefficient for the better part of a decade. Of the six largest U.S. banks – J.P. Morgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley – the average revenue per employee increased by 13% from 2005 through Oct. 2012. Citi was the only one of the six to see its full-year revenue per employee drop during that period. There’s one easy way to improve that: job cuts.
Corbat announced that Citi would slash more than 11,000 jobs in December. It’s unclear if this emerging market efficiency cleanse will tip the scales north of the previously announced job cut target. But heads are likely to roll soon.
Seeking to further emphasize efficiency, Citi’s Corbat has reportedly proposed new metrics aimed at tracking the performances of individual executives.
Finance chiefs for 26 of the 27 EU nations plan to back the proposed rules on banker bonus caps. The U.K. appears alone in its opposition.
Nomura is swapping chief financial officers in a major management shakeup that will see the number of senior managing directors reduced from 80 to 71.
Research Purging (Financial News)
Societe Generale’s restructuring effort has had major impact on its research division, which has said goodbye to a number of its big names, including most recently chief European economist James Nixon.
Revenue Headwinds (Financial News)
Incoming market structure regulations are likely to take a bigger bite out of investment banking revenues than originally thought, according to some analysts. J.P. Morgan, Barclays and Deutsche Bank, among others, face the biggest threats.
Fund Management Jobs (eFinancialCareers)
Thirteen of the City of London’s biggest fund managers have started a new initiative that aims to create over 2,000 jobs a year for graduates from a diverse range of backgrounds.
If At First You Don't Succeed, Stay at Harvard (Business Insider)
Why did Blackstone COO Tony James attend business school? Because he was unemployable. “I applied to 300 jobs and didn't get any of them so I decided that I would stay in school.” Sounds sensible.
Buzz Around the Office
A Connecticut Dunkin’ Donuts employee foiled a would-be robber by throwing a pot of hot coffee in the man’s face. She then embraced her inner movie star and belted out the company’s catchphrase, “Go Run on Dunkin’,” as the suspect fled the area.
List of the Day: Changing Careers
Feel the need to change career paths? The first thing you’ll need to do is change your resume and the manner in which you apply for the job. Here are some tips.
- Tailor each job to accentuate transferrable qualities.
- Highlight achievements and outcomes, not tasks.
- Explain in your cover letter how you will transition.
