Citicorp Confirms Report; It May Lay Off Up to 17,000

In another sign of the banking industry’s troubles, Citicorp confirmed Tuesday that it may lay off as many as 17,000 people under its cost-cutting program--10,000 more than previously announced.

Chairman John S. Reed made the announcement last week when talking to a group of summer interns, according to Bank Letter, an industry publication.

A Citicorp spokeswoman confirmed the report but said some of the cuts may be offset by additional hiring in the bank’s worldwide business, particularly its consumer business in Asia.

Spokeswoman Amy Dates said the cuts are a continuation of an austerity program Reed announced in January when he said he wanted to reduce expenses by $1.5 billion through 1993. Citicorp, like many large East Coast banks, has seen a dramatic rise in defaults in its commercial real estate and corporate loan portfolio because of the recession.

About 7,000 people have lost their jobs at Citicorp in the past five months. The brunt of the cuts have centered on Citicorp’s Japan, Europe and North America division, analysts said. Citicorp, the nation’s largest banking company with $216.9 billion in assets, had 95,000 employees at the end of 1990.

The cuts will focus on middle management and support staff in Citicorp’s businesses worldwide, Dates said.

Charles Peabody, banking analyst for Kidder, Peabody & Co., said the additional layoffs weren’t surprising. Cost cutting described by Reed in January would require 15,000 to 20,000 layoffs, he said.

Raphael Soifer, bank analyst for Brown Bros. Harriman & Co., said the lack of detail about the increased layoffs makes it difficult to assess the impact on corporate operations. But the cuts potentially are steep enough to affect Citicorp’s revenues, he said.

“They will be getting to the point, if they’re not getting there already, where they’re cutting muscle and not fat,” Soifer said.

Cutbacks in the cards for CITICORP Citicorp has increased the number of people it may lay off under its cost-cutting program to about 17,000. The nation’s biggest bank holding company had approximately 95,000 employees at the end of 1990. 1st Quarter Earnings (in millions) 1991: $70 1990: $371 1st Quarter Revenue (in billions) 1991: $3.51 1990: $3.47 Annual Earnings in billions 1990: $.458 1989: $.498 1988: $1.85 1987 (losses): -$1.13 A BRIEF CHRONOLOGY Dec. 18, 1990: Announces that it will lay off 8,000 people over the next three years, cut its annual dividend from $1.78 to $1 per share, and set aside $340 million to cover bad loans. Jan. 22, 1991: Says it will further cut staff and trim $1.5 billion in expenses over the next two years. Also plans to sell six or seven small businesses as part of its cost-cutting program. Feb. 22, 1991: Sells $590 million in perferred stock to a Saudi prince, giving Citicorp cash to back up shaky loans. March 6, 1991: Sells another $600 million in preferred stock to institutional investors. July 9, 1991: Acknowledges that it now may lay off as many as 17,000 people under its cost-cutting program. Source: Company reports, AP