Citigroup to close six Hong Kong branches and lay off staff

Staff to be culled as part of 11,000 job losses globally in bid to save US$1b

PUBLISHED : Friday, 07 December, 2012, 12:00am
UPDATED : Friday, 07 December, 2012, 3:34am

Citigroup is to close six branches and cut jobs in Hong Kong over the next few months as part of efforts to trim its workforce worldwide.

The closures come on the heels of the Japanese investment bank Nomura quietly laying off staff in Hong Kong.

The new cuts are on top of several rounds of lay-offs at international banks in Hong Kong this year that have resulted in hundreds of job losses.

Behind the staff cuts are weak financial markets, including a downturn in new listings on the Hong Kong stock exchange, and low turnover.

Citigroup announced on Wednesday that it would slash 11,000 jobs globally, or 4 per cent of its workforce. The bank had been aggressively expanding its branch network in Hong Kong and now has 46 branches, up from just 25 three years ago. A Citigroup spokesman said the staff impact of closing six branches would be minimal.

Michael Corbat, chief executive at Citigroup, said the New York-based bank would close 84 branches globally, 44 in the US, in a bid to save more than US$1 billion a year from 2014. Corbat succeeded Vikram Pandit as chief executive in October when Pandit abruptly left the helm.

The headcount reduction will mainly come from Citigroup's consumer banking business, where 6,200 jobs are expected to vanish. Total staff numbers will be cut to 250,000, down by a third from before the global financial meltdown four years ago.

At Nomura, Japan's largest brokerage firm by assets, pressure has been mounting from shareholders to cut costs. At least 20 staff members in the equity sales and trading department in Hong Kong have been told to leave in February, according to two people with direct knowledge of the matter.

"After failing to build itself up into a top-tier investment bank, the company is struggling in the highly competitive environment in Asia, where more job cuts in the region are expected in the coming weeks," one of the people said.

Nomura in Hong Kong declined to comment.

After the latest round of layoffs, industry executives expressed cautious views about hiring next year. Some banks have started to renegotiate contracts with high-paying staff, offering them lower compensation.