The embattled bank is clamping down on everything from photocopying to mobile phone use, a far cry from the lavish sponsorship deals of two years ago, writes Prionsias O'Mahony
EMBATTLED FINANCIAL behemoth Citigroup, struggling with $55 billion in write-downs and credit losses over the last year, is cutting back on colour photocopying and the use of Blackberry mobile devices in a desperate effort to reduce corporate fat.
An internal memorandum says that "each of us must do our part" by "challenging every dollar" spent. Colour copying and printing is allowable for client presentations but is "unnecessary for internal purposes". Furthermore, "presentations should be printed double-sided to reduce unnecessary paper usage". Over time, the bank will be removing colour copiers and printers "from the locations where they are not essential".
The bank is also clamping down on excessive Blackberry usage, introducing stricter controls on who is entitled to the device, as well as banning expense claims for more than one mobile phone. Other more conventional cost-cutting measures have been introduced, such as reducing the use of outside management consultants; limiting how much employees can spend on client meetings; banning "offsite" meetings of staff; and ensuring that all computer hardware and software purchases be pre-approved.
The Scrooge-like measures are in stark contrast to Citigroup's previous nonchalance towards such matters. At the end of 2006, the firm agreed to a $400 million stadium-naming-rights deal with the New York Mets baseball team.
In the same year, Citigroup shelled out millions more to rename the Wang Centre in Boston; it also paid out for costly logo and re-branding exercises. Just last month, the company re-iterated that it was "strongly committed" to the $400 million Citi Field agreement, a deal that many saw as superfluous and hubristic.
Shareholders, who have seen their investments lose over 60 per cent of their value over the last year, will be wishing that this new-found attention to detail had occurred earlier. Former chief executive Chuck Prince was famously dismissive of the dangers inherent in the subprime mortgage crisis. "When the music stops in terms of liquidity, things will get complicated," he said last summer. "But as long as the music is playing, you've got to get up and dance. We're still dancing."
Vikram Pandit, Prince's replacement, seems to have similarly under-estimated Citi's task. The firm has taken more than $20 billion in write-downs since Pandit assured investors on taking over that Citi was "well-capitalised".
The company has cut 14,000 jobs in 2008 although commentators expect that figure to grow. At the end of 2007, a bloated Citigroup employed 48,000 more people than it did 12 months previously, mainly through acquisitions.
The latest prohibitions on colour copying and the like may seem bizarrely insufficient against a backdrop of $55 billion in write-downs and losses. However, the element of the surreal pales in comparison to the doomed efforts of ex-WorldCom chief executive Bernie Ebbers. Just months before the biggest corporate bankruptcy in history, Ebbers was asked by staff what they could do to cut costs. "I'm glad you asked that", he replied. He went on to propose the secret re-filling of mineral water containers with tap water; monitoring staff consumption of coffee filters to prevent theft of coffee bags; monitoring smoking areas to ensure employees weren't taking too many cigarette breaks; tracking of staff e-mail to ensure staff arrived on time; and other equally peculiar cost-cutting measures.
It was a case of too little, too late for WorldCom and Ebbers, who received a 25-year prison sentence in 2005 for his own fraudulent activities within the company. Citigroup will be hoping for a better outcome.
