Smith Barney has begun the job of consolidating some branch offices, as part of a larger cost-cutting program in the works at parent Citigroup. Sources close to the firm say Citi’s retail broker/dealer arm has closed 5 satellite branches outright in Georgia and Florida, and plans to combine 40 branch offices into others. Branches will be consolidated all over the country, but the majority of these consolidations will be concentrated in the Southeast. About 30 financial advisors will depart for sure, out of a total at Smith Barney of 13,100, and 80 Smith Barney employees.
Smith Barney declined to comment on where specific offices to be consolidated are located, nor when that consolidation would begin, but said in a statement, “Smith Barney has strategic real estate plans to consolidate our presence in key markets where we have attractive and available space, and to close a handful of small satellites in markets that are not core to our strategy."
The firm announced its plans to close some branch offices on April 11, as part of a Citigroup-wide initiative to eliminate layers of management, and consolidate office and corporate functions, among other structural changes. (Click here to read more about changes at Smith Barney). In all, Citigroup will move over 9,500 jobs to lower cost locations in the United States and abroad, and eliminate 17,000 jobs world-wide, with about two-thirds through attrition, Citi said.
Citigroup’s its cost-cutting plan will save the firm about $2.1 billion in 2007, $3.7 billion in 2008, and $4.8 billion in 2009. Citigroup took a $1.38 billion charge against pre-tax earnings in the first quarter for the restructuring, with other charges expected to total about $200 million pre-tax over subsequent quarters of 2007.
On April 16, Citigroup reported record revenues of $25.5 billion, up 15 percent in 2007 first quarter income of $5.01 billion, or $1.01 per share, (including the $1.38 billion pre-tax cost for the structural expense review). Citigroup’s Global Wealth Management gorup, which includes Smith Barney, reported record revenues.
Rick Peterson, of Rick Peterson & Associates, a recruiter in Houston said Smith Barney is under pressure to improve profitability, and to contribute more Citigroup’s overall bottom line. “Smith Barney represents seven percent of (Citigroup’s) the total revenue, and less than two percent of the total profit, yet they represent half the legal problems,” Peterson said.
