CitiFinancial to close 6 branches in state

Posted: 8:04 pm Tue, June 1, 2010
By Staff and Wire Reports

Citigroup Inc. will close 376 branches and cut as many as 720 jobs at its CitiFinancial consumer-lending businesses in the United States and Canada, under a plan to make the units more attractive to potential buyers.

CitiFinancial, based in Baltimore, will close six branches in Maryland.

The job cuts, disclosed by CitiFinancial Chief Executive Officer Mary McDowell in an interview with Bloomberg, represent about 6.4 percent of the unit’s total staff in the two countries. CitiFinancial will also convert 182 of the U.S. branches into “servicing centers” catering to customers who might need loan modifications or other debt restructurings, she said.

CitiFinancial has 33 branches in Maryland; six will close and three will become servicing centers, according to company spokeswoman Shannon Bell.

The company’s headquarters building on St. Paul Place will not be affected. She said Citigroup is not divulging job cuts in each state.

Citigroup CEO Vikram Pandit has been trying to sell CitiFinancial since January 2009, one of at least 21 businesses the New York-based bank tagged for sale or liquidation after its $45 billion bailout in 2008. The bank, which has sold U.S. and Japanese brokerages, had signaled consumer-lending units saddled with loan losses might be tougher to sell.

The branch cuts “should provide a lot more clarity in terms of potential buyers looking at the full-service network branches, and being able to grow that segment,” McDowell said. “We think it does increase the salability and eventually the fundability, because whoever buys CitiFinancial will need to fund it.”

CitiFinancial North America has offered personal loans for car repairs, furniture purchases, vacations and medical bills as well as debt-consolidation loans that can be used to pay off credit cards and other bills, according to its website. The unit also refinances mortgages and makes home-equity loans.

Citigroup plans to rename CitiFinancial, with the new brand unveiled by the end of the year, the bank said in a statement.

“The name will embrace CitiFinancial’s commitment to its customers and reflect the strength of its franchise,” according to the statement.

In the U.S., CitiFinancial will cut 500 to 600 jobs as it closes 330 branches, McDowell said. Following the conversions, the U.S. network would have 1,321 full-service branches, she said. CitiFinancial will keep at least one full-service branch or servicing center in every state, she said.

Connecticut, Rhode Island and Nevada will have only servicing centers, company spokeswoman Shannon Bell said.

In Canada, CitiFinancial will close 46 branches and eliminate about 120 positions, Bell said.

CitiFinancial was previously called Commercial Credit. Sanford Weill, who created Citi, bought the Baltimore lender in 1986 and folded it into what is now Citigroup.

Citigroup shares fell 2.78 percent, or 11 cents, to close at $3.85 Tuesday.

Bloomberg contributed to this article.