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Citigroup to cut or reassign more than 26,000 jobs to streamline operations

Charles Prince III spent his first two years as chief executive of Citigroup adding more compliance officers and improving the bank's controls after a series of messy scandals.

Now, Prince is looking to slim its bulging compliance ranks in an effort to keep the bank from getting bogged down.

Under pressure from investors, Prince is set to release plans today for the bank's first major overhaul since a merger forged Citigroup a decade ago. He is planning to eliminate or reassign more than 26,000 jobs, or about 8 percent of the work force, as part of a broad effort to streamline the bank's unwieldy global operations and get its costs under control.

Citigroup's consumer and investment banking businesses are expected to face the most severe cuts. But across the company, legal and compliance departments are being heavily scrutinized, people who have been briefed on the plans said.

Cuts in compliance would represent a reversal from a few years ago, when Citigroup was beefing up its compliance staff after several scandals. Citigroup, like other banks, was tarred by its dealings with Enron and WorldCom and by investigations into analysts' conflicts during the Internet boom.

Citigroup officials cautioned that any changes would be an effort to improve efficiency and coordination, not relax controls. They also suggested that any effort to "optimize compliance" was distinct from the expense review.

Citigroup officials recognized that compliance had become cumbersome as early as last summer. In August, Lewis Kaden, the company's chief administrative officer, began examining ways to streamline the bank's compliance operations, starting a pilot program in its private bank and brokerage division and a review of other businesses. But with less urgency and internal support, the project was left unfinished.

Only in December, when Prince elevated Robert Druskin to the role of chief operating officer and gave him the task of a big expense review, did the compliance project gain new currency.

Of course, the company is also looking elsewhere for cost savings. Citigroup is planning major upgrades to its technology systems and is looking for ways to use its real estate more efficiently.

Another big source will be cutting jobs: 10,000 to 12,000 are in the offing. Meanwhile, Citigroup is also planning to relocate thousands more to lower cost areas, including India and several smaller US cities.

Citigroup's consumer and credit card operations will experience most of the job cuts, with customer service employees and back-office workers among the groups most affected. Citigroup's investment bank is also taking a harder look at less productive junior managers between the vice president and managing director ranks, with the goal of improving productivity.
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