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Citigroup to announce corporate overhaul today

April 10, 2007

From staff and wire reports

Citigroup Inc. employees in Hagerstown can expect "slight changes" as the result of a companywide cost-cutting measure, local spokesman Phil Kelly said Tuesday.

More details will be available today, he said.

"There will be some slight changes, but we're not going anywhere," Kelly said.

Citigroup Inc. chairman and chief executive Charles Prince said Monday he would release details of cost-cutting steps later this week, including the consolidation of some operations and moving others to lower-cost locations.

In a memo to employees that was made available to The Associated Press, Prince said the cuts were aimed at "eliminating expenses while advancing our core strategic growth objectives." The process, he said, "has been and will be challenging."

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He sketched broad outlines of the overhaul, but said specifics would be released at a Web conference Wednesday. Prince indicated the cutbacks would be throughout Citigroup's operations worldwide.

Citigroup, the nation's largest financial institution, has more than 327,000 workers in more than 100 countries. About 2,400 employees work at Citigroup's credit card processing center in Hagerstown.

Media reports about the financial review, which has been under way since the fourth quarter, have said 26,000 workers could lose their jobs or be reassigned. Cost savings could approach $2 billion a year, they said.

Citigroup shares rose 1 cent to close at $51.58 Tuesday on the New York Stock Exchange.

In the memo, Prince said: "We will consolidate certain back-office, middle-office and corporate functions at the business, regional and headquarters levels to eliminate duplication of effort and focus, instead, on building truly efficient, world-class business operations with scale."

Prince also said some operations would be moved "to lower-cost locations." And, he said, there would be continuing efforts aimed at "rationalizing our technology platforms to operate more efficiently and effectively."

Last month, Citigroup announced it was launching a takeover bid worth as much as $13.3 billion for Japan's Nikko Cordial Corp., the country's third-largest brokerage. In December, Citigroup acquired an 85.6 percent stake in the southern China-based Guangdong Development Bank for $3.1 billion.

Prince wants to boost the bank's international business to contribute as much as 60 percent to total revenue, up from the current 45 percent.

Staff writer Erin Cunningham contributed to this story.

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