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Friday, 29 August 2008

Citi tells staff to cut costs

UNITED States-based financial giant Citigroup is well-known for its massive staff bonuses in boom times but now, hit by big losses, it is scrimping to cut costs.

The embattled group is clamping down on colour photocopying by staff and the purchase of new BlackBerrys, the popular portable e-mailing gizmo.

Other drastic measures detailed in a memo sent to staff worldwide include a ban on employees holding off-site meetings, apparently to cut down on the cost of refreshments bought outside.

Separately, sources suggested that up to 200 information technology (IT) jobs could go at Citi's Singapore operations.

In the internal memo, obtained by The Straits Times yesterday, New York-based Mr John Havens, the head of Citi's institutional clients group, urged employees to be much more frugal in their expenses. 'All new BlackBerrys will require pre-approval,' Mr Havens stated in the memo that originated from Citi's New York headquarters.

He added that the managing of expenses is a 'critical aspect' of the bank's strategy - and of employee's jobs.

He said Citi is trying to slash photocopying and printing costs. 'Colour presentations are unnecessary for internal purposes; therefore going forward colour copying and printing should only be used for client presentations.'

The memo also flagged a major review of the 'very substantial temporary workforce' at Citi. 'We will be conducting a detailed review of all our temporary workforce engagements to understand more efficient ways to fulfil our needs.'

The memo also said Citi would review its use of management consultants to determine if there are 'more efficient sources' to fill its needs.

'Going forward, all new management consulting engagements will require pre-approval,' Mr Havens wrote.

Citi has been hit by billions of dollars of losses in the wake of the US sub-prime mortgage crisis and credit crunch.

Sources at Citigroup's Singapore office said yesterday that the memo, dated Aug 15, was mainly circulated to the bank's institutional clients group, including trading and investment banking as well as hedge-fund management.

These measures aside, sources say a significant part of the cost savings at Citi is still likely to come from staff layoffs. They say that in Singapore, as many as 10 per cent of Citi's estimated 2,000 staff working in the information technology area - about 200 people - could be asked to leave the bank soon.

However, this could also happen through natural attrition as a number of staff here are keen to leave bank due to poor morale, they say.

A Citi source said the mood at the bank was similar to the gloom that took hold after the Sept 11, 2001 terrorist attacks. 'A lot of good IT people have already left for the likes of Barclays Capital and the attrition will continue,' he said yesterday.

He said the IT staff affected by this restructuring exercise could include those at the operational level, such as project managers, and vendor management and client management staff.

When contacted, Mr Adam Rahman, head of corporate affairs at Citi Singapore, stressed that the bank 'remains committed to investing in growing the business in key markets'.

'Managing expense and reviewing of cost structures is an ongoing exercise that helps to increase efficiency and productivity, and reduce waste,' he said. 'Given the current global environment, we are evaluating a tighter set of expense policies across our businesses.'

He did not comment on the question of the possible job losses.

Singapore is a key hub for Citi in Asia with about 9,000 staff, the bank said.

Across the industry, banks including Citi are not just chopping jobs and bonuses, but are also taking away perks.

The New York Times reported that analysts at Swiss banking giant UBS are now flying economy class on domestic flights, while Deutsche Bank employees were told they will not be reimbursed for 'adult entertainment of any kind'.

Meanwhile, Goldman Sachs traders in the US no longer get free water and soft drinks, it said.

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