Citigroup Locations To Be Cut, Most Lending Will Limited To Wealthy Customers
Citigroup, which has received $45 billion in TARP funds -- in addition to billions in government asset guarantees -- has come up with a brash tax-payer funded restructuring plan: cut U.S. locations and limit most lending to only the wealthy.
As AP reported morning Citigroup is reportedly planning to reduce its "retail footprint to just six major metropolitan areas and limit most lending to wealthy customers."
For now, anyway, hopes that the U.S. taxpayer's investment in Citigroup would actually boost lending, seem to be rather unlikely.
Here's more from the AP:
"Citi's management is looking to reduce the bank's U.S. consumer lending to mainly credit cards and "jumbo" mortgages, The Wall Street Journal reported Wednesday, citing unnamed people familiar with the situation.The New York-based bank's executives are expected in October to present plans to the board of directors to pare Citi's retail branch network and concentrate mainly on the New York, Washington, D.C., Miami, Chicago, San Francisco and Los Angeles areas, the paper said.
Most of Citi's branch locations are located internationally. Citi currently operates about 1,000 U.S. branches, much fewer than the 5,000-plus run by Bank of America Corp. and JP Morgan Chase & Co., which expanded its network with the takeover of Washington Mutual last year. While the moves would be designed to help the bank work "smaller-but-smarter," the paper said some Citi executives are concerned that the U.S. government, which owns a 34 percent stake in Citi, could balk at branch closings.
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advertisementCiti is looking to sell its 120 branches in Texas and is mulling whether it should continue to maintain a large footprint in cities like Boston and Philadelphia, the paper said. Citi holds few deposits in those locations compared with competitors."
The WSJ, which originally broke the story, reports that the cuts come just a year after Citigroup was mulling acquisitions that would vastly expand its retail banking presence.
For U.S. taxpayers, however, the larger question is why taxpayer money should have gone to a bank that is now looking to severely scale back both its lending and retail presence. Citi's response to the WSJ couched the issue in vague notions of improving customer service:
"We understand we have a great deal to do to improve the overall customer experience," Citi spokesman Michael Hanretta said. "We're on a very significant journey to make it simpler, more rewarding, and highly transparent to bank with us."
The takeaway? Fewer loans for average Americans equals "a better customer experience."
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First Posted: 09-24-09 07:41 AM | Updated: 09-24-09 09:02 AM