Citigroup's sweeping overhaul to cut costs and streamline its global banking operations likely will affect more than 500 people in Maryland as the company consolidates operations through layoffs and by shifting workers around the world.
A Citigroup spokeswoman said about 240 of the nearly 6,000 Maryland workers would lose their jobs as a result of yesterday's announcement. But she added that the company expects to move 300 other jobs into Maryland during the next year in an effort combine back-office and other corporate functions.
"In Maryland, ... the total impact is minimal," said Citigroup spokeswoman Janis Tarter.
The New York-based bank announced yesterday that it will cut 17,000 jobs, or about 5 percent of its 327,000-employee work force. Another 9,500 jobs will be reassigned to locations around the United States and abroad where the cost of doing business is cheaper, the company said. About two-thirds of those jobs will be lost through attrition.
Tarter did not provide a breakdown of the job cuts in Maryland because the company has just begun notifying its workers this week. The expected layoffs represent about 4 percent of Citigroup's Maryland work force.
Of the 300 jobs being added here, many are in information technology and operations, such as account maintenance and support, according to Tarter, who did not know where those jobs were relocating from.
In Maryland, employees work across Citigroup's businesses, including 1,000 workers at Baltimore-based CitiFinancial, the company's consumer finance business, and another 2,400 employees at its credit-card processing center in Hagerstown.
Citigroup's Maryland work force also includes employees in corporate offices, investment banking and those at Smith Barney brokerages.
In late 2005, Citigroup swapped its asset management unit for the brokerage business of Legg Mason Inc. of Baltimore. The brokerage business was absorbed into Smith Barney.
Smith Barney said it will close or consolidate about 40 offices, including one in Maryland, and move workers to nearby branches. Smith Barney said it plans to close its smaller Frederick office and relocate workers to its Baltimore branch. Smith Barney now has 16 stand-alone branch offices and eight satellite locations in Maryland. The firm could not provide the number of Smith Barney workers in Maryland yesterday.
Citigroup had been under pressure to cut its burgeoning expenses and improve its financial performance. Changes were announced yesterday after a months-long review led by Citigroup Chief Operating Officer Robert Druskin.
A majority of cost savings involve eliminating overlapping positions, particularly in middle management and corporate ranks. Citigroup said it also plans to consolidate back-office and corporate functions at the business, regional and headquarters level. And many departments, such as legal, human resources and risk operations, would be consolidated to provide services across business groups.
The company did not specify layoffs by business units, but it said about 57 percent of the cuts will occur abroad. Workers will receive severance packages. Citigroup is expected to spend $1 billion in severance costs.
"Ultimately these changes will streamline Citi and make us leaner, more efficient and better able to take advantage of high revenue opportunities," Citigroup Chairman and Chief Executive Officer Charles O. Prince III said in a statement yesterday.
Including previously announced cost savings associated with streamlining the company's information technology systems, Citigroup is expected to save $2.1 billion this year, $3.7 billion next year and $4.6 billion in 2009.
Despite the large work-force reductions, Citigroup expects its employee ranks to grow this year because of acquisitions and it plans to open new offices, particularly overseas, Druskin said.
Some analysts expected to see deeper cuts.
Shares of Citigroup lost 60 cents, or 1.15 percent, to close at $51.80 yesterday.
Citigroup said it would record a pretax charge of $1.38 billion in the first quarter of this year, and additional charges totaling about $200 million pretax over the subsequent quarters of 2007. The bank reports its first-quarter earnings next week.
Citigroup's Hagerstown credit-card processing center is Washington County's fourth-largest employer.
The company opened the facility in 1985, and its work force has grown significantly since then, said Timothy R. Troxell, executive director of the Hagerstown-Washington County Economic Development Commission.
"Obviously, as one of our largest employers, they're very important to our county, not only for the jobs they provide to our citizens but all the community events they sponsor and all the things they do to help the quality of life," Troxell said yesterday.
Maryland's unemployment rate remains at 3.8 percent as employers added 2,700 jobs in February, according to the U.S. Department of Labor. Troxell said Washington County's economy has become more diversified over the years so that job cuts at one company like Citigroup would not significantly impact the region. Washington County's unemployment rate was 5.5 percent in February, the most recent figures available.
Philip Kelly, director of public affairs at the Hagerstown credit-processing center, said he expects the impact of the job cuts at the facility to be "slight or minor."
The Associated Press and Bloomberg News contributed to this article.
Citigroup employees in Maryland
Of the company's about 6,000 workers, here's a breakdown:
1,000 at Baltimore-based CitiFinancial, the company's consumer finance business.
2,470 at the credit-card processing center in Hagerstown.
The rest are Smith Barney and Citigroup corporate workers as well as those in the company's investment banking business.
[Source: Citigroup, Hagerstown-Washington County Economic Development Commission]