Boston, MA 03/06/2013 (wallstreetpr) – Desperate times call for desperate measures. The world’s third largest bank, Citigroup Inc (NYSE:C) might either pull-back or exit from its businesses in 21 countries that can be categorized as ones that are part of its least-efficient markets. Michael Corbat is making every effort to cut costs and this measure might become a reality. These targeted countries produce less than the revenue that the New York-based banks revenue and they all have a very low 0.4 percent return on assets said Corbat in a presentation. He went on to state that the results from these countries are unsustainable and in the current markets if there is no clear-cut path to returns that are acceptable then the bank intends to either scale back or exit from certain business lines.
Corbat has been trimming all the banks spending and he has just taken over from Vikram Pandit who was the former CEO and had expanded Citigroup Inc (NYSE:C)’s emerging market operations before being ousted by the company directors in October. Any additional withdrawals would spur Corbat’s decision to pull down the shutters on certain branches in Brazil and the U.S. He could also cut out from consumer operations in Turkey, Uruguay, Romania, Paraguay, and Pakistan. He said that Citigroup Inc (NYSE:C) served institutional clients in these countries but did not consider that the returns in the consumer business did not solicit continuation.
A financial supplement noted that Citigroup Inc (NYSE:C) operates in over 100 countries and over half of its revenue came in from outside the U.S. Corbat said that the efficiency ratio for the 21 countries from the Optimize or Restructure market segments was 73 percent. Another 18 countries belonged to the “Optimize then grow” market category and U.K and the U.S fit in here. Around 55 percent of the Citigroup’s revenue comes from these markets and have an efficiency ratio of 69 percent, owing to their high expenses. By 2015, the target is to achieve a mid-50 percent range. Close to $156 billion in unprofitable and unwanted assets are housed by the Citi Holdings division. It would have to be scaled back as it is a major drag on earnings said Corbat. John Gerspach, the Citigroup Inc (NYSE:C) CFO said that Citi Holdings would be able to breakeven if there is a decline in its credit losses.
Shares of Citigroup Inc (NYSE:C) went up by 1.54% to close at $43.60